A Surge in Tornado Cash Activity
It was in 2024 when Tornado Cash, the respected crypto mixing protocol, which practically disappeared from the sight of the public, suddenly arose again. More than $1.8 billion in deposits were made in the first six months, which is 45% more than the inflow reported for the entire of 2023, according to Flipside Crypto, a company that analyses blockchain. The recent increased rate in the utilization of the protocol can be attributed to the fact that the platform became unfashionable following the US governmental decree two years ago.
Tornado Cash Attracts Bad Actors
Without a doubt, Tornado has been more and more the focus of attention in the bad guys’ circles. One of the biggest funds, the $100 million-dollar Loot which the Poloniex hacker was able to keep last year, was transferred to Tornado Cash in the last two months, according to Arkham Intelligence. Moreover, the hackers who hacked the HECO Bridge and the Orbit Chain transferred each $166 million and $47.7 million respectively to the mixer this year.
August 2022 was the month when Tornado Cash faced American sanctions because of illegal actions carried out by the launders of over $455 million stolen bitcoin by Lazarus, a North Korea-related hacking group. Monthly deposits to Tornado Cash were down to over 90%, as the sanctions set in. The taxes were enforced on the platform, but the actual situation is that the system is still not easy for the US to oversee.
Blockchain Mixers See Resurgence
“Already on the whole, which corresponds to the global rise in market activity, mixers are already seeing a resurgence in 2024,” notes the recent report issued by the blockchain analytics firm Chainalysis. “In the context of looking at the overall growth of various mixing services, like WasabiWallet, JoinMarket, and Tornado Cash, it is clear that these three have increased significantly,” Chainalysis said in their report.
Tornado Cash, for instance, is one of those mixing services that were initially created to respect privacy, a vital principle in the decentralized cryptocurrency area. The mentioned services bring together seemingly random funds that come from different transactions, which makes it difficult for one to trace them back to the original source. Therefore, these platforms were of great interest to illegal entities searching for the means to clean the money or the assets they had falsely.
US House Proposes Ban on Cryptocurrency Mixers
Addition to the rising numbers of crimes such as money-laundering, Democratic representatives suggested the US Blockchain Integrity Act which prohibits cryptocurrency mixers. The act called for an end to illicit finance and for clearer regulations to include provisions that proscribed financial institutions, cryptocurrency exchanges, and registered money service businesses from accepting funds processed through a mixer. A sum of $100,000 would be a maximum fine for failure to comply.
Newly come this situation appears in the background of the U.S. government’s war with crypto-platforms mixing services. The most recent example is the Bitcoin Fog founder who was the mastermind of fleeing $400 million crypto-mixing service, who was sentenced to money laundering. The guilty jury convicted Roman Sterlingov for money laundering, conspiring to launder, operating an unlicensed money-transfer business, and infringements of the D.C. Money Transmitters Act. Similarly, Roman Storm, and Roman Semenov – Tornado Cash co-founders have been arrested. These two have been accused of the following: conspiracy to commit money laundering, conspiracy to violate US sanctions, and conspiracy to operate an unlicensed money-transmitting business.
