Sanctions couldn’t terminate Tornado Cash, says Chainalysis

  • The decentralised nature of Tornado Cash has made it nearly impossible to put an end to it.

  • Chainalysis revealed that total inflows to the mixer dropped by 68% in the 30 days after sanctions.

  • Tornado Cash’s smart contract code can be used at any time.

Tornado Cash’s decentralised nature makes it hard to shut down

The Chainalysis team revealed that the sanctions imposed on Tornado Cash weren’t able to completely cut off its usage. In its latest report, Chainalysis said the sanctions had affected the service but hadn’t completely shut it down.

This latest report comes after the Office of Foreign Assets Control (OFAC) announced sanctions against Tornado on August 8, 2022. The sanctions were based on allegations of its part in the laundering of crime proceeds.

In a report published on Monday, January 9th, Chainalysis revealed that the sanctions negatively affected the cryptocurrency mixer. Total inflows to Tornado Cash declined by 68% in the 30 days after the sanctions were implemented. 

However, Tornado Cash was not completely shut down thanks to the fact that it is a decentralised smart contract. The Chainalysis team said;

“That suggests sanctions against decentralized services act more as a tool to disincentivize the service’s use rather than cutting off usage completely.”

The sanctions saw the Tornado Cash front-end website taken down. However, its smart contracts continue to run indefinitely, meaning anyone can still technically use it at any time.

Chainalysis cited the darknet marketplace Hydra, which, unlike Tornado Cash, saw its crypto inflows drop to zero after a series of sanctions resulted in the German police seizing all its servers. 

Tornado Cash faced sanctions for money laundering

The Tornado Cash crypto mixing service was sanctioned last year due to concerns that individuals and entities used it to launder billions of dollars worth of cryptocurrencies since 2019. 

The service was allegedly used to launder the $455 million stolen by the North Korea-affiliated Lazarus Group.

The sanctions were increased in November 2022 as the OFAC cracked down on the website for enabling malicious cyber activities, which ultimately support the [North Korea weapons of mass destruction] program.

TORN, the native token of the Tornado Cash platform continues to trade. At press time, the price of Tornado Cash stands at $4.155, up by more than 2% in the last 24 hours.

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