Despite the sanctions imposed by the United States Treasury, Tornado Cash has received $1.9 billion in deposits in the first half of 2024.
Tornado Cash, a cryptocurrency aggregator, has experienced an unexpected rise in deposit volume, despite the sanctions imposed by the US Treasury in August 2022.
Tornado Cash took in approximately $1.9 billion in deposits during the first six months of 2024, which is a 50% increase from the entire year of 2023, according to data from Flipside Crypto.
It is important to note that the sanctions prevent US users from interacting with the protocol, resulting in the blacklisting of any wallet that does so. This prevents the use of the wallet on legally compliant cryptocurrency exchanges.
Tornado Cash remains a favored destination for large cybercrime organizations seeking to conceal the source of their illicit funds, despite these limitations.
The hacker responsible for the $100 million Poloniex exchange exploit has transferred $76 million to the mixer since May, according to data from Arkham Intelligence.
In addition, the individuals responsible for the Orbit Chain and HECO Bridge exploits have transferred $166 million and $48 million into Tornado Cash, respectively, during the first half of the year.
Most recently, a Tornado Cash deposit was used to finance a confirmed wallet address that was used in the $235 million breach of the Indian exchange WazirX.
In October 2022, Coin Center filed a lawsuit in response to the sanctions, contending that smart contracts such as Tornado Cash are not entities, a prerequisite for the sanctions to be enforceable.
Furthermore, they contend that users are merely recuperating their own funds without any intermediaries or asset mingling, thereby questioning the legality of the sanctions that have been implemented.
Several prominent cryptocurrency firms, such as Coinbase, and advocacy organizations such as The Blockchain Association and Coin Center, have also endorsed the lawsuit, asserting that the sanctions are unlawful.
The U.S. Treasury Department maintains that cryptocurrency mixers are a national security concern and that Tornado Cash has consistently failed to implement sufficient controls to prevent money laundering.
Sanctions are still in effect, and individuals who engage with the protocol are at risk of experiencing severe legal consequences.
Nevertheless, the consistent influx of deposits and withdrawals on Tornado Cash suggests that a significant number of users are prepared to assume this risk, potentially as a result of the necessity for anonymity in their transactions.
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