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Source: Сointеlеgrаph

Sanctions on cryptocurrency mixer Tornado Cash have left a vacuum for illegal funds mixing services, but more time is needed before we know the full implications, according to Chainalysis chief scientist.

During a demonstration of the newly launched blockchain analysis platform Chainalysis Storyline, asked Chainalysis Chief Scientist Jacob Illum and Australia and New Zealand Regional Manager Todd Lenfield about the impact of the Tornado Cash ban.

Illum said that while the mixer is still in use, more time is needed to “see what’s going on” and how “the world reacts to this designation”, adding that people are trying to figure out what to do now that the crypto mixer is working effectively. passed:

“People are becoming more cautious in this space and don’t know how to interact with Tornado Cash. We have seen deposits in services that provide similar activities go down, at least temporarily, because people rate like “What does this mean to me?” ”

But where others see an obstacle, some clearly see an opportunity, Illum noted, there are plenty of what he calls “junior mixers” who want to cash in on the void left by Tornado Cash.

An August report by blockchain security company SlowMist states that 74.6% of the stolen funds on the Ethereum network were transferred to Tornado Cash in the first half of 2022, which is more than 300,000 Ether (ETH), which is about $380 million.

Chainalysis data showed that the 30-day moving average of total daily value received by crypto mixers hit a new all-time high of $51.8 million in April.

“If there is no liquidity, you are effectively draining a lot of [a mixers] opportunities,” Lenfield added:

“Hunting for places where there is liquidity, when it’s highly visible after things like the OFAC sanction on Tornado Cash, I think it’s a very interesting place to keep an eye on.”

Tornado Cash was authorized by the US Department of the Treasury on August 8, which means US citizens or entities that interact with the mixer could face criminal or civil liability. More than 40 crypto addresses allegedly linked to Tornado Cash have been added to the Office of Foreign Assets Control (OFAC)’s list of specially designated citizens.

Related: Tornado Cash is the latest chapter in the war against encryption

When asked about the level of sophistication of law enforcement in dealing with crypto-related crimes, Illum mentioned that one of the biggest gaps in law enforcement right now is blockchain-related training:

“As [blockchain] is gaining acceptance, more people are getting access to crypto, which also means there are more agents or law enforcement officers who also need to have access to crypto.”

Lenfield noted that the authorities are starting to create opportunities for cryptocurrencies, referring to the Australian Federal Police (AFP) recent establishment of a crypto unit dedicated to monitoring crypto transactions:

“It’s active in their minds, they set goals and work towards it. But like any other aspect, there is a learning curve to get them there, but these agencies provide 100% visibility and development in this area.”

Earlier in September, the Chainalysis Crypto Incident Response team helped law enforcement recover $30 million in crypto stolen from the Ronin Bridge hack by the North Korean-linked Lazarus group, which used Tornado Cash to launder stolen assets.

Source: Сointеlеgrаph

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