Tornado Cash Experiences $1.9 Billion Surge in Deposits Amid Sanctions

Tornado Cash, the banned crypto mixing service, has seen a significant rise in activity in 2024 despite sanctions and legal challenges. In the first half of the year, it recorded $1.9 billion in new deposits, marking a 50% increase from the previous year, as per Flipside Crypto data.

The U.S. Office of Foreign Assets Control (OFAC) imposed sanctions on Tornado Cash in August 2022. This action followed revelations that the North Korean-linked Lazarus Group utilized the service to launder about $455 million. These sanctions have serious implications, as interacting with Tornado Cash can lead to blacklisting by compliant crypto exchanges, severely restricting the ability to convert cryptocurrencies into fiat.

Despite these restrictions, Tornado Cash remains a preferred tool for hackers. Notable incidents include the hacker from the Poloniex exchange heist funneling $76 million to Tornado Cash since May. 

Furthermore, culprits behind the HECO Bridge and Orbit Chain breaches moved $166 million and $48 million into the mixer during the same period. Another significant instance saw a wallet linked to the $235 million WazirX hack receiving funds through Tornado Cash on July 18.

The sanctions against Tornado Cash have spurred a legal battle spearheaded by several prominent figures within the crypto sector. They argue that sanctioning an anonymous service like Tornado Cash is unconstitutional, citing violations of free speech rights. This lawsuit has gained support from major crypto entities, including Coinbase, The Blockchain Association, and Coin Center.

However, the U.S. Treasury maintains that crypto mixers pose a national security threat, accusing Tornado Cash of lacking adequate anti-money laundering controls. Amid these controversies, the mixer’s co-founders have faced legal repercussions. 

Alexey Pertsev received a prison sentence in the Netherlands, while Roman Storm, who is fighting charges in the U.S., was released on a $2 million bond. The third co-founder, Roman Semenov, remains elusive.

Despite the mounting legal pressures and the global crackdown, Tornado Cash’s continued usage highlights persistent challenges in governing decentralized technologies and ensuring compliance with international regulations.

Over the past 24 hours, Tornado Cash (TORN) has seen a minor increase of 0.60%, settling at $2.63. The cryptocurrency’s market capitalization is approximately $13,851,121, positioning it at rank 917 among its peers. The 24-hour trading volume has slightly decreased by 0.29% to $35,263.