Tornado Cash Reaches $1.9 Billion in Deposits in 2024

Tornado Cash reaches $1.9 billion in deposits during the first half of the year, seeing a resurgence in 2024. This is despite ongoing legal battles and sanctions for the sanctioned cryptocurrency mixer. The surge represents a 50% increase from the entire 2023 volume.

Tornado Cash deposits resurged after more than a year. Source: Flipside Crypto Tornado Cash Deposits Surged After Year of Low Activity 

The Office of Foreign Assets Control (OFAC) sanctioned Tornado Cash in August 2022 after discovering its use by the North Korean Lazarus Group to launder $455 million in stolen funds. The OFAC sanctions create severe consequences for users. Anyone interacting with the protocol faces blacklisting. This means crypto exchanges following the law won’t accept their wallets.

As a result, users can’t easily turn their crypto into fiat through major exchanges. Despite this risk, the crypto mixer remains popular with hackers trying to hide stolen funds. 

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Blockchain analytics firm Arkham Intelligence reports that hackers behind recent high-profile exploits have funneled significant amounts through this platform. The Poloniex exchange hacker transferred $76 million, while the HECO Bridge and Orbit Chain attackers moved $166 million and $48 million, respectively.

Most recently on July 18, hackers struck the Indian crypto exchange WazirX, stealing $235 million. Investigators have now traced a direct connection to crypto mixer. They discovered that one of the confirmed wallet addresses involved in the WazirX hack received funds through a Tornado Cash deposit.

Industry Backlash Against Sanctions

These incidents raised questions about the platform’s privacy, security, and regulation in the crypto space. Crypto industry figures are challenging the sanctions through an ongoing lawsuit, arguing that they violate free speech rights and are unconstitutional. Major players like Coinbase and advocacy groups have thrown their support behind this legal battle.

Meanwhile, the U.S. Treasury maintains that crypto mixers pose a national security threat, citing it’s failure to implement adequate anti-money laundering controls.

The platform’s co-founders face their own legal challenges. Alexey Pertsev received a five-year prison sentence in the Netherlands for money laundering. Roman Storm, arrested in the U.S., pleaded not guilty and was released on a $2 million bond. The third co-founder of Tornado Cash, Roman Semenov, remains at large.

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