Tornado Cash Deposits Surge to $1.9 Billion in 2024 Despite Sanctions
Key points:
Tornado Cash has seen a resurgence in 2024, with $1.9 billion in deposits in the first half of the year.
This increase comes despite ongoing US sanctions and legal issues for its founders.
Hackers continue to use Tornado Cash to launder stolen funds from various crypto exploits.
WazirX, an Indian crypto exchange, recently suffered a $235 million breach linked to Tornado Cash.
The US Treasury views crypto mixers as a national security threat, but some in the industry are challenging the sanctions.
Tornado Cash, a cryptocurrency mixing service, has experienced a significant resurgence in 2024 despite ongoing sanctions and legal challenges.
According to data from Flipside Crypto, the platform received about $1.9 billion in deposits during the first six months of the year. This marks a 50% increase compared to the total deposits for all of 2023.
The Office of Foreign Assets Control (OFAC) sanctioned Tornado Cash in August 2022 after discovering that the North Korean hacking group Lazarus had used it to launder around $455 million in stolen funds.
These sanctions mean that any wallet interacting with Tornado Cash could be blacklisted, making it difficult to withdraw funds through legal crypto exchanges.
Despite these restrictions, Tornado Cash remains popular among hackers looking to hide the source of stolen cryptocurrencies.
Recent data from blockchain analytics firm Arkham Intelligence shows that the hacker behind the $100 million Poloniex exchange exploit transferred $76 million to Tornado Cash since May. Similarly, hackers responsible for the HECO Bridge and Orbit Chain exploits moved $166 million and $48 million respectively through the mixer in the first half of 2024.
The ongoing use of Tornado Cash by hackers was highlighted in a recent incident involving WazirX, an Indian crypto exchange.
On July 18, 2024, WazirX reported a security breach resulting in the loss of $235 million. One of the wallet addresses linked to this hack was funded through a Tornado Cash deposit, further demonstrating the mixer’s role in cryptocurrency-related crimes.
The crypto industry has been challenging the Tornado Cash sanctions through a lawsuit filed in 2022.
Supporters argue that the sanctions are “unlawful and unconstitutional” because Tornado Cash is not a country or an “entity,” and blocking it violates free speech rights under the US Constitution.
Major crypto firms like Coinbase and advocacy groups such as The Blockchain Association and Coin Center have backed this lawsuit.
However, the US Treasury maintains that crypto mixers pose a national security threat, and Tornado Cash failed to implement adequate controls to prevent money laundering.
This stance has led to legal troubles for the platform’s co-founders. Alexey Pertsev was sentenced to over five years in Dutch prison on money laundering charges. Roman Storm was arrested in the United States and pleaded not guilty to similar charges, while Roman Semenov remains at large.
The resurgence of Tornado Cash highlights the ongoing challenges in regulating decentralized finance (DeFi) platforms. While US authorities have cracked down on crypto-related crimes, the decentralized nature of protocols like Tornado Cash makes them difficult to police effectively.
