Tornado Cash, a data protection solution on EVM, was sanctioned by the US Treasury Department in August. Hackers Still Using Tornado Cash Despite Sanctions?
In August 2022, the US Treasury Department’s Office of Foreign Asset Control (OFAC) sanctioned Tornado Cash. It is a cryptocurrency mixer that breaks the connection between the on-chain source and the destination address of a transaction.
Sanctions affecting Tornado Cash
According to Dow Jones, a person who violates OFAC sanctions is considered a criminal and could face fines – from a few thousand dollars to several millions – and up to 30 years in prison.
The severe punishment due to the sanctions might have affected the flow of stolen funds, but hackers started using alternatives like 3CRV Pool to avoid being blacklisted. However, hackers still use Tornado Cash.
TempleDAO, a yield farming protocol, was hacked last week. The hackers used over $2.34 million from the log and moved the amount with the help of Tornado Cash. They performed over 21 different transactions to transfer over 1921 Ether.
In early September, PeckShield discovered that the DAO Maker exploiter used Tornado Cash to transfer over 500,000 DAI tokens. Later, over 720 ETH was transferred using Tornado Cash in another hack that took place in September. The hack exploited an Ethereum vanity address generated using the Profanity tool.
As of this writing, Tornado Cash is still worth over $172 million in total, according to data from DappRadar. However, the monthly users of the protocol fell by over 50% after the sanctions.
Sanctions protest the crackdown on the mixed service
The crypto community did not warmly welcome the sanctions. Coin Center, a non-profit crypto organization, announced that it is suing OFAC over The Tornado Cash sanctions. Cryptocurrency exchange Coinbase is funding the lawsuit against the US Treasury Department, which currently involves six plaintiffs, including Coinbase employees.
Several users sent ETH in small amounts from a blacklisted address to troll the sanctions.
Source: Twitter
The community believes Tornado Cash is an open-source public infrastructure that criminals have abused.
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