Last year, in August, the Office of Foreign Assets Control (OFAC) initiated sanctions against Tornado Cash. The US regulator had indicated that the crypto mixer was involved in money laundering cases. Therefore, Tornado Cash had to suspend all activity. But Chainalysis reveals that things did not go as planned.
Tornado Cash Crypto Mixer Can’t be Unplugged!
Developer of Tornado Cash Alexey Pertsev was indicted in August for crypto money laundering. The crypto mixer he created was allegedly used to fund North Korean hackers. With the indictment of the developer, Tornado Cash was ordered to cease all activities. It is true that since then it became difficult to access the platform. But Chainalysis discovered in the a tweet this January 9th crypto mixer remained functional.
The blockchain analytics firm said:Tornado Cash’s business dropped significantly after the sanctions, but the platform did not completely cease to function. Tornado Cash works with smart contracts that cannot be taken offline, so nothing but the legal consequences of sanctions violations stops anyone from using it“.
Therefore, the imposed sanctions had a noticeable effect on the mixer, but not in the way that the authorities would like. They seem to have succeeded mostly in training a 68% drop in total feeds in Tornado Cash. This decline was observed within 30 days of the OFAC sanctions taking effect.
Sanctions affect centralized platforms the most
According to Chainalysis, while no one can easily remove Tornado Cash, it is quite the opposite with centralized services. For example, the Hydra darknet market ceased to function completely after the intervention of the German authorities. Indeed, crypto logins became zero after the servers of this centralized service were seized.
Chainalysis explained:This suggests that fines against decentralized services act more as a means of discouraging the use of the service rather than completely suspending its use.“.
Out of chain analysis report, another report, from blockchain security firm SlowMist, reveals an interesting fact. Indeed, 1,233,129 ETH worth $1.62 billion was sent to Tornado Cash in 2022. At the same time, 1,283,186 ETH, or $1.7 billion, was withdrawn from the crypto mixer.
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No less than it dampened my enthusiasm, an unsuccessful investment in a cryptocurrency in 2017 only increased my enthusiasm. Therefore I decided to study and understand the blockchain and its many uses and transmit with my pen information about this ecosystem.