Banned crypto mixer Tornado Cash has seen a surprising 50% increase in deposit volume during the first half of 2024 despite ongoing sanctions and legal troubles for its founders. Data from Flipside Crypto reveals the protocol received $1.9 billion in deposits, surpassing 2023’s total.
The Office of Foreign Assets Control (OFAC) sanctions imposed on Tornado Cash in Aug. 2022. These sanctions were triggered by the discovery that North Korean hacking group Lazarus had used the protocol to launder approximately $455 million in illicit funds.
Despite the looming threat from legally compliant crypto exchanges, Tornado Cash remains a popular choice for large hacking groups seeking to obscure their ill-gotten gains.
Blockchain analytics firm Arkham Intelligence reports that the Poloniex exchange hacker moved $76 million to the mixer since May, while the HECO Bridge and Orbit Chain exploiters transferred $166 million and $48 million, respectively, in the first half of 2024.
Tornado Cash co-founder sentenced to over 5 years
The crypto community has been challenging the Tornado Cash sanctions through an ongoing lawsuit filed in 2022. They say the sanctions are illegal and argue that Tornado Cash is not a country or “entity.” They also say blocking it violates free speech rights. Major players like Coinbase and advocacy groups are supporting the lawsuit.
Meanwhile, Tornado Cash’s co-founders face legal issues. Alexey Pertsev got over 5 years in Dutch prison for money laundering in 2023. Roman Storm was arrested in the US on similar charges. He pleaded not guilty and was freed on a $2 million bond. The third co-founder, Roman Semenov, is still at large.
Recently, a Dutch court rejected Pertsev’s request for release as he prepares his appeal. His lawyers say his continued detention hinders his ability to prepare his defence because the case is very technical. The court’s decision raises concerns. However, these concerns are about the effects on software developers and their potential responsibility for how others use their creations.
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