Tornado Transaction Volumes Plunged by 90 Percent Due to the Effects of US Sanctions

According to the report from blockchain analysis firm TRM Labs on Wednesday, the overall usage of Tornado Cash, a privacy-focused smart contract, dropped by 90% following US sanctions.

Tornado Cash is an Ethereum-based application designed to keep users’ transactions private. Tornado Cash and its co-founder Roman Storm are accused of facilitating over $1 billion in money laundering transactions and laundering millions of dollars for sanctioned organizations such as the North Korea-based Lazarus Group.

The US Department of the Treasury’s Office of Foreign Assets Control (OFAC) blacklisted Tornado Cash in 2022. One of the reasons was that the system was increasingly being used to hide the tracks of funds stolen by crypto criminals.

Transaction Volume Declined to $425 Million

It was observed that Tornado Cash usage was linked to some illegal activities. Despite government measures taken to limit the illicit use of this service, some actors continued to use the service. In response, the US government waged war against the system and subjected it to scrutiny.

Between February and July of 2022, a transaction volume of $2.8 billion was recorded through Tornado Cash. However, when looking at the same period in 2023, this volume has decreased to $425 million. This situation shows that the sanctions and measures taken did not yield fully positive results, but they were effective in reducing the transaction volume.”

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