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.
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is an award-winning media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. In November 2023, CoinDesk was acquired by Bullish group, owner of Bullish, a regulated, institutional digital assets exchange. Bullish group is majority owned by Block.one; both groups have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary, and an editorial committee, chaired by a former editor-in-chief of The Wall Street Journal, is being formed to support journalistic integrity.