- The crypto mixer Tornado Cash has witnessed a surprising increase in deposit volumes during the first half of 2024, despite ongoing sanctions and legal battles faced by its founding team.
- Interestingly, Tornado Cash garnered approximately $1.9 billion in deposits in the first six months of this year, reflecting a 50% increase compared to the total deposits amassed throughout 2023, according to data from Flipside Crypto.
- “Despite the stringent sanctions, Tornado Cash remains a popular destination for major hacking groups aiming to obscure the trail of unlawfully obtained funds,” insights from Arkham Intelligence highlight.
Tornado Cash witnesses a significant surge in deposits in 2024, defying ongoing sanctions. Read on to discover the detailed analytics and the repercussions for the crypto market.
Unprecedented Rise in Tornado Cash Deposits Amid Sanctions
In a surprising turn of events, Tornado Cash has managed to attract $1.9 billion in deposits during the first six months of 2024. This significant surge represents a remarkable 50% increase compared to the total deposits for the entirety of 2023. Much of this activity can be attributed to its continuing popularity among major hacking groups, despite facing stringent sanctions.
The Impact and Continued Use Despite OFAC Sanctions
The Office of Foreign Assets Control (OFAC) had imposed sanctions on Tornado Cash in August 2022 after it was revealed that the Lazarus Group laundered roughly $455 million in illegal funds through the protocol. These sanctions blacklisted anyone interacting with the protocol, effectively barring their wallets from being accepted at compliant crypto exchanges. Despite this, Tornado Cash continues to be a favored platform for hackers seeking to launder illicit funds. For instance, hackers responsible for the $100 million Poloniex exchange breach funneled $76 million through Tornado Cash as of this May, according to Arkham Intelligence.
Detailed Examination of Major Hacks and Fund Movements
Blockchain analytics reveal that Tornado Cash remains crucial for laundering hacked funds. In the first half of 2024, entities behind the HECO Bridge and Orbit Chain exploits transferred illicitly gained $166 million and $48 million to Tornado Cash, respectively. Additionally, a verified wallet address linked to the $235 million WazirX hack in July was found to have been funded through Tornado Cash, adding to its controversial standing in the crypto space.
Legal Challenges Against Tornado Cash Sanctions
The sanctions against Tornado Cash have not gone unchallenged. A lawsuit filed in 2022 is still ongoing, with plaintiffs arguing that the sanctions are “illegal and unconstitutional.” They contend that an anonymous mixer service like Tornado Cash cannot be classified as a nation or institution and that its banishment violates the freedom of speech rights guaranteed by the U.S. Constitution. This legal battle raises critical questions about governance and user autonomy within the decentralized finance ecosystem.
Conclusion
Tornado Cash’s resilient performance amid severe regulatory measures underscores its contentious yet vital role in the crypto economy. While the protocol’s future remains uncertain due to ongoing legal scrutiny and potential further sanctions, its recent activity reflects the broader challenges and complexities faced by decentralized finance in balancing innovation with regulatory compliance.
