Tornado Cash Regains Momentum, Receives $1.8 Billion So Far In 2024

Tornado Cash, a prominent “crypto-mixing” protocol, has experienced a resurgence in 2024 following a decline in activity prompted by sanctions imposed by the US government two years ago.

The protocol has witnessed an impressive influx of deposits, exceeding $1.8 billion in the first half of this year alone. The figure represents a 45% increase compared to deposits received in 2023, found blockchain analytics firm Flipside Crypto.

Mixing services like Tornado Cash’s are designed to uphold privacy, a fundamental principle within the decentralized realm of cryptocurrencies. These services pool funds from various transactions, making it more challenging to trace them back to their original source.

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Tornado Cash Attracts Inflows From Hackers

In recent times, Tornado Cash has attracted substantial inflows from hackers involved in major thefts.

For one, the perpetrator behind the Poloniex exchange hack, which resulted in the theft of over $100 million last year, transferred $76 million to Tornado Cash in the past two months, according to Arkham Intelligence.

Additionally, individuals responsible for exploiting the HECO Bridge and Orbit Chain have funneled $166 million and $47.7 million, respectively, into the mixing service this year.

In a recent report, blockchain analytics firm Chainalysis also highlighted the resurgence of mixers in 2024, attributing it to a broader upswing in market activity. The report noted that WasabiWallet, JoinMarket, and Tornado Cash have experienced the most significant growth among individual mixing services.

The US Treasury announced sanctions against Tornado Cash in August 2022 due to its involvement in laundering. Over $455 million worth of cryptocurrency was stolen by the North Korea-affiliated hacking group, Lazarus.

While the sanctions caused monthly deposits to Tornado Cash to plummet by more than 90%, the decentralized nature of the protocol has made it challenging for US authorities to effectively monitor its usage.

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US Crackdown On Crypto Mixers And Enforcement Actions

The US crackdown on crypto mixers has led to enforcement actions against key figures in the crypto community, notably Roman Sterlingov, Roman Storm, and Roman Semenov.

Sterlingov was found guilty by a US district court for operating Bitcoin Fog, a cryptocurrency mixer that facilitated the laundering of over 1.2 million bitcoins (approximately $400 million) from darknet marketplaces.

Sterlingov faced charges of money laundering, conspiracy, operating an unlicensed money-transmitting business, and violations of the DC Money Transmitters Act. He could face up to 20 years in prison for the most serious charges and an additional 5 years for other charges. The court also ordered the forfeiture of his assets, including 1,354 BTC and various other cryptocurrencies.

Roman Storm and Roman Semenov, co-founders of Tornado Cash, have also been indicted.

The indictment charges them with conspiracy to commit money laundering, conspiracy to violate US sanctions, and conspiracy to operate an unlicensed money-transmitting business.

Storm is arrested and is set to face trial, while Semenov remains at large.

Disclaimer: Crypto is a high-risk asset class. This article is provided for informational purposes and does not constitute investment advice. You could lose all of your capital.