Sanctions targeting decentralized cryptocurrency mixer Tornado Cash have not been able to stop the tool from being used, Chainalysis reports. However, a clear outflow of service users was noticed.
Chainalysis: sanctions failed to destroy Tornado Cash
On August 8, the Office of Foreign Assets Control (OFAC) announced sanctions targeting cryptocurrency mixer Tornado Cash. The point was that this tool was allegedly used in laundering the proceeds of crime related to digital assets.
A report published on January 9 by Chainalysis said the sanctions had had some effect, causing interest in Tornado Cash services to decline. This trend was particularly noticeable within 30 days after the entry into force of the sanctions.
However, the company also stressed that because Tornado Cash is a decentralized platform based on smart contracts, “no person or organization can ‘pull the plug’ as easily (…) as with a centralized service.”
Chainalysis explains that while the mixer sanctions removed its “front-end website, its smart contracts can run indefinitely, meaning anyone can continue to use it at any time.
This suggests that sanctions against decentralized services act more as a disincentive to use the service
The company’s latest report also showed that the illegal use of Tornado Cash was mainly related to cryptocurrency hacking and fraud.
Total inflows to Tordando Cash fell by 68% in the month following the sanctions. No specific numbers were provided, but the chart shows that daily receipts into the mixer sometimes reached almost $25 million a day in the 30 days leading up to the sanctions, then dropped to as low as $5 million a day.
The creator of Tornado Cash is in prison
Recall that the creator of Tornado Cash, Alexey Pertsev, was detained and brought before the Dutch prosecutor’s office on August 12 in Amsterdam. Authorities accuse him of being involved in money laundering.
The services claim that Tornado Cash was used by hackers who collaborated with the North Korean Kim regime.