• Chainalysis research suggested that the illegal use of Tornado Cash was essentially associated with crypto hacks and scams, with an approximate average of thirty-four percent of all inflows.
• Tornado Cash, an open-source, decentralized cryptocurrency tumbler, was recently in news for its conjectured role in the laundering of criminal proceeds.
• The sanctions were able to reduce the inflow of Tornado Cash by sixty-eight percent in the past month, but it is still operating and in use.
Tornado Cash, an open-source, decentralized cryptocurrency tumbler, has been crippled after the levying of sanctions from the Office of Foreign Assets Control (OFAC). The firm was recently in news for its conjectured role in the laundering of criminal proceeds, which was disclosed on August 8th last year. However, due to the decentralized nature of the platform, no one person or institution can force the company to shut down operations conveniently.
In the most recent report, Chainalysis research suggested that the illegal use of Tornado Cash was essentially associated with crypto hacks and scams, with an approximate average of thirty-four percent of all inflows. The report, published by Chainalysis, provided an example of a darknet market which was using Tornado Cash to launder funds.
The sanctions have been able to reduce the inflow of Tornado Cash by sixty-eight percent in the past month. Despite this, the firm is still operating and in use. The report details how the sanctions have had an impact, as the number of inbound transactions to the mixer decreased significantly when the sanctions were announced. The report also explains how the outbound transactions have remained relatively stable, indicating that the mixer is still being used to obfuscate transactions.
The report concluded that while the sanctions have had a significant effect, they have not been able to completely stop the usage of Tornado Cash. Given the decentralized nature of the platform, it is difficult to completely shut down operations, and the ability of the firm to continue to operate is a testament to the power of decentralized technology. It is unclear how the sanctions will evolve in the future, but it is likely that they will continue to affect the usage of Tornado Cash.