Tornado Cash deposits volume in the first half of 2024 exceeded the result for the whole of last year, despite the sanctions

What’s new? The Tornado Cash cryptomixer, which was included in the US sanctions list in August 2022, continues to operate. Chainalysis experts reported back in January last year that economic restrictions could not completely stop the use of the service. And since the beginning of this year, according to Flipside Crypto data, the amount of deposits sent to Tornado Cash amounted to $1,9 billion, this is 50% more than the figure for the whole of 2023.

Flipside Crypto data

What else is known? The sanctions of the Office of Foreign Assets Control (OFAC) within the US Department of the Treasury imply that wallets interacting with Tornado Cash are blacklisted and cannot interact with centralized crypto exchanges (CEXs). In this way, the authorities aim to prevent the conversion of cryptocurrencies laundered through the mixer into fiat, which is possible on CEXs.

Despite the restrictions, the service continues to be popular among hacker groups, for interacting with which it was initially blocked. So, according to the analytical platform Arkham Intelligence, the hacker behind the hacking of Justin Sun’s Poloniex crypto exchange in the amount of $100 million has transferred $76 million in cryptocurrency to Tornado Cash since May.

And the hackers who carried out the HECO Bridge and Orbit Chain exploits transferred $166 million and $48 million, respectively, into the mixer. On July 18, an unknown person hacked Indian crypto exchange WazirX for $235 million, and one of its associated wallets was also funded with Tornado Cash after the incident.

A lawsuit has been ongoing in the United States since 2022 in which a group of crypto industry figures are trying to challenge the sanctions. They note that Tornado Cash cannot be subject to economic restrictions because it is not a legal entity or a state, and its blocking violates the constitutional right to free speech.

The lawsuit was supported by the leading US crypto exchange Coinbase, as well as lobbying and human rights organizations Blockchain Association and Coin Center. In turn, the Treasury Department calls crypto mixers a threat to national security.

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The service’s creators have also been prosecuted. Developer Alexey Pertsev was sentenced in the Netherlands to 64 months in prison (more than five years) for laundering $1,2 billion. He intends to challenge the sentence and is seeking bail to prepare an appeal, but was denied bail earlier this month.

Service creator Roman Storm was released on $2 million bail in the US. The start of proceedings in his case was postponed from September to December this year at the request of the defense. His colleague Roman Semenov remains at large.

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Last March, Tornado Cash developer Ameen Soleimani introduced a new version of the crypto mixer. A fork of the original Tornado Cash protocol called Privacy Pools contains a feature that allows you to prove the legitimacy of funds received.

Last February, Elliptic analysts reported that the Sinbad crypto mixer was a new version of the Blender mixer, which was the first among such services to be put on the US sanctions list. A month later, they clarified that after Sinbad was blocked, hackers returned to using Tornado Cash.