By
Temitope Olatunji
April 24th, 2024
Despite the OFAC sanctions on Tornado Cash, users have continued to use the platform.
The OFAC sanctions on Tornado Cash seem to have almost no impact on the cryptocurrency mixing service, which has increased since the penalty. At the beginning of this week, the US Treasury’s Office of Foreign Asset Control (OFAC) classified Tornado Cash as well as an ecosystem of linked wallets. The financial intelligence and enforcement agency added that criminals, including popular North Korea’s Lazarus group, have laundered money through the Tornado Cash platform. Apparently, the agency said the Lazarus group had laundered over $7 billion using the crypto mixing service.
On the same day the OFAC sanctioned Tornado Cash, co-founder Roman Semenov revealed that his GitHub account had been suspended. He asked, “Is writing an open source code illegal now?”
In addition, Tornado Cash users have seen their funds locked. The loss of the account has triggered an outcry from the crypto community. Ethereum co-founder Vitalik Buterin also came out to say he has used Tornado Cash for good causes.
Transaction Volumes on Tornado Cash Surges amid OFAC Sanctions
Despite the OFAC sanctions on Tornado Cash, users have continued to use the platform. Transaction volume on the crypto mixing service increased between Monday and Tuesday. The platform processed almost $3 million in transactions the following day of the sanctions. According to BotTornado, which keeps track of the services’ 24-hour transactions, transaction volume after the penalty reached $2.99 million. The report shows that more users (166 transactions) sent 0.1 ETH. The total ETH sent was 1,787.
In the long run, the US still plays a major role in converting cryptocurrencies back to fiat. Cryptocurrencies going through the Tornado Cash platform will still be converted to fiat before they can be used for payments. With the US position on the conversion process, the government deploys sanctions to address critical situations like this.
Since the OFAC placed sanctions on Tornado Cash, there have been a lot of comments from industry experts addressing the matter. A former advisor at the Treasury’s Office of Terrorism and Financial Intelligence who is now the Head of Legal Team at blockchain analytics firm TRM Labs, Ari Redboard, also stated his view. Redboard said even bad acts do not want to put their funds where the US government is shining a light. Speaking further he said, knowing that hackers attacked Ronin was a bad situation. However, it became worse and a national security issue when it was revealed that it was North Korea.
Retired Drug Enforcement Agency (DEA) agent William Callaham said the OFAC move on Tornado Cash shows that the US is serious with mixers. In his opinion, the sanctions may not wholly deter money launderers. However, it will definitely “put a great dent into their operations.”