Ethereum Mixer Tornado Cash Despite sanctions in 2024, he received nearly $2 billion.

In the first six months of 2024, more than $1.9 billion was invested in Ethereum mixer Tornado Cash (TORN). Although things have cooled down in July – the protocol seems to have attracted only $65.1 million in deposits, according to data provided by crypto analytics service Flipside.

Given the hybrid nature of Tornado Cash, the Total Value Locked (TVL) measure is less reliable for judging the level of ecosystem activity. Total locked value refers to the value of assets stored in a decentralized application. This is why TVL is not commonly used to measure activity in Tornado Cash. The expected use case is to deposit and withdraw funds anonymously—instead of keeping them in the protocol for long periods of time like most decentralized financial services.

Still, DeFillama's Tornado Cash TVL data shows massive growth, with the protocol starting the year below 160,000 ETH and currently hovering around 168,600 ETH. In US dollars, this is a growth in value from $374.4 million to $572.82 million – taking into account property price growth.

What is Tornado Cash?

Tornado Cash is a coin mixer created to protect the privacy of crypto users. Using zero-knowledge proof cryptography, the protocol de-identifies users' deposits and allows them to withdraw to a new address that is not associated with the old one.

Ethereum Mixer has been infiltrated by wallets linked to major hackers, including the hacker behind the Poloniex hack that sent $3.3 million worth of Ethereum (ETH) to the mixer in early May. Due to hacking-related transactions—including those allegedly linked to North Korea—the US Treasury Department sanctioned Tornado Cash in early August 2022.

This was followed by a lengthy lawsuit against the developers of Tornado Cash, which was seen as a major attack by many in the crypto community. That case continues, with last week's ruling delaying Tornado Cash co-founder Roman Storm's money laundering trial over prosecutorial objections.

Coinbase's chief legal officer, Paul Grewal, said in April that the U.S. Treasury had “passed the point of breaking old rules,” blaming the misuse of Tornado Cash on developers and TORN owners.

Immutable, open-source software code is not property, which creates a real issue for the Treasury because it has the power to control only the ‘property' in which a foreign national has an interest, he said at the time.

Ethereum founder Vitalik Buterin said that the 64-month prison sentence of Tornado currency developer Alexey Persev at the end of May was “really sad”, and continued to support privacy-oriented crypto tools, encouraging people to develop “next-gen” solutions. .

“I think a lot of people were going under the assumption […] It's okay to build software, he said during a fireside discussion at Dapcon in Berlin, and it's a completely legal and legitimate way to fight for privacy.

Edited by Stacy Elliott.