Tornado Cash Trading Volumes Nosedived 90% After U.S. Sanctions

While North Korean hackers have mostly moved to other Bitcoin mixers, some illicit use of Tornado Cash continues, a report from TRM Labs says.

AccessTimeIconOct 11, 2023 at 1:00 p.m. UTC
Updated Oct 12, 2023 at 3:41 p.m. UTC
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Overall usage of crypto mixer Tornado Cash dropped 90% following U.S. sanctions, a Wednesday report by blockchain analytics firm TRM Labs shows.

The U.S. Treasury Department’s Office of Foreign Asset Control (OFAC) blacklisted Tornado Cash in August 2022, alleging it was a key tool used by malicious actors to launder money. Tornado Cash allows crypto users to exchange tokens while masking wallet addresses on Ethereum, BNB Chain, Arbitrum, Avalanche and Optimism networks. The service itself is not nefarious but was increasingly used by crypto criminals to obfuscate the trail of stolen funds.

The U.S. Department of Justice has alleged the service was used to launder more than $1 billion in illicit funds, including by North Korean hacker group Lazarus.

TRM researchers said that while North Korean hackers have mostly moved to other Bitcoin mixers, some illicit use of Tornado Cash continues.

“Though the government's actions have crippled Tornado Cash’s service, a few illicit actors aren't deterred, showing that while the sanctions were a hurdle, they weren't a full stop for all nefarious activities,” the report stated.

From February to July 2022, transactions worth over $2.8 billion flowed through Tornado Cash, but during the same period in 2023, volumes dropped to $425 million, according to the report.

The crypto community largely condemned the sanctions but with little impact. In August, a group of crypto investors and developers lost a lawsuit funded by Coinbase that argued the Treasury Department overstepped its authority.

Edited by Sandali Handagama.


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Shaurya Malwa

Shaurya is the Deputy Managing Editor for the Data & Tokens team, focusing on decentralized finance, markets, on-chain data, and governance across all major and minor blockchains.

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