{"id":37786,"date":"2022-09-19T17:16:00","date_gmt":"2022-09-19T14:16:00","guid":{"rendered":"https:\/\/forklog.com\/en\/?p=37786"},"modified":"2025-08-29T21:31:28","modified_gmt":"2025-08-29T18:31:28","slug":"what-is-the-tornado-cash-mixer-and-why-was-it-sanctioned","status":"publish","type":"post","link":"https:\/\/forklog.com\/en\/what-is-the-tornado-cash-mixer-and-why-was-it-sanctioned\/","title":{"rendered":"What is the Tornado Cash mixer, and why was it sanctioned?"},"content":{"rendered":"<div class=\"wp-block-text-wrappers-cards single_card\">\n<h2 class=\"card_label\">Key points<\/h2>\n<ul class=\"wp-block-list\">\n<li>Tornado Cash is a decentralised protocol that enabled anonymised transactions on Ethereum and several other blockchains.<\/li>\n<li>According to analytics firms, the protocol became a popular way to launder cryptocurrencies linked to cybercrime. In August 2022 the US sanctioned Tornado Cash, and Dutch authorities arrested co-founder Alexey Pertsev. Tornado Cash repositories were removed from GitHub, and users\u2019 cryptoassets worth more than $430m were frozen.<\/li>\n<li>In September 2022, after community protests, US officials allowed certain users to withdraw assets from blacklisted addresses if they could prove lawful provenance.<\/li>\n<li>A group of Tornado Cash users sued the US government in a Texas court, alleging government overreach\u2014a view echoed by civil-liberties groups and crypto-industry figures.<\/li>\n<\/ul>\n<\/div>\n<div class=\"wp-block-text-wrappers-cards single_card\">\n<h2 class=\"card_label\">Who built Tornado Cash<\/h2>\n<p>The decentralised Tornado Cash service was created by developers Roman Storm, Roman Semenov and Alexey Pertsev. They co-founded the cybersecurity firm PepperSec and say they have experience in blockchain projects.<\/p>\n<p>The Tornado Cash protocol launched on Ethereum in August 2019. There is no public information about external investment, and the service did not conduct token sales.<\/p>\n<p>At first, the developers retained control over the protocol via a wallet with a <a href=\"https:\/\/forklog.com\/en\/news\/what-is-a-multisignature-what-is-a-ring-signature\">multisig<\/a>. In May 2020, after the launch of version two, the team burned keys to the smart contracts to increase decentralisation. More than 1,100 users participated in the so-called trusted setup, including <a href=\"https:\/\/forklog.com\/en\/news\/who-is-vitalik-buterin\">Vitalik Buterin<\/a> and Gavin Andresen.<\/p>\n<p>The Tornado Cash user-interface code was stored on IPFS, reducing the risk of deletion, including under legal bans. The interface remains available so long as at least one user hosts it.<\/p>\n<\/div>\n<div class=\"wp-block-text-wrappers-cards single_card\">\n<h2 class=\"card_label\">What the TORN token was for<\/h2>\n<p>Tornado Cash has its own ERC-20 <a href=\"https:\/\/forklog.com\/en\/news\/what-is-a-governance-token\">governance token<\/a>, TORN, issued on Ethereum.<\/p>\n<p>An airdrop of 500,000 TORN to early users took place in February 2021, distributed across more than 7,500 addresses. On average, early users received 38 TORN\u2014worth over $7,700 at the start of public trading.<\/p>\n<p>The TORN governance token had three functions:<\/p>\n<ul class=\"wp-block-list\">\n<li>collateral for relayers;<\/li>\n<li>staking;<\/li>\n<li>participation in the Tornado Cash DAO.<\/li>\n<\/ul>\n<p>Submitting a proposal to the Tornado Cash DAO required at least 1,000 TORN. Voting required just 1 TORN, with one token equal to one vote.<\/p>\n<p>Proposals could concern:<\/p>\n<ul class=\"wp-block-list\">\n<li>adding new pools;<\/li>\n<li>changing reward rates;<\/li>\n<li>allocating the DAO treasury.<\/li>\n<\/ul>\n<p>Each proposal was open for voting for five days and needed at least 25,000 token-votes to pass.<\/p>\n<\/div>\n<div class=\"wp-block-text-wrappers-cards single_card\">\n<h2 class=\"card_label\">How Tornado Cash worked<\/h2>\n<p>There are many mixers used for anonymous cryptocurrency transfers. Most are centralised services that can abuse user trust by stealing funds or personal data.<\/p>\n<p>By contrast, Tornado Cash was built for decentralisation: a set of smart contracts with which users interacted via Web3 wallets. The contracts accepted deposits and mixed them in a single pool using <a href=\"https:\/\/forklog.com\/en\/news\/what-is-a-zero-knowledge-proof\">zk-SNARK<\/a> technology. Transactions occurred without revealing payment details; assets were anonymised and not linked to a specific owner.<\/p>\n<p>For users the flow was simple: send crypto to a smart contract from one address, then withdraw to another address that is not linked to the sender. After depositing, a private note is generated. It works like a secret key, required to withdraw funds to the other address.<\/p>\n<p>The protocol supported anonymous pools for six assets: ETH, DAI, cDAI, USDC, <a href=\"https:\/\/forklog.com\/en\/news\/what-is-tether-usdt\">USDT<\/a> and WBTC. The withdrawal fee was 0.3% of the transfer amount, though some low-liquidity pools charged no fee.<\/p>\n<\/div>\n<div class=\"wp-block-text-wrappers-cards single_card\">\n<h2 class=\"card_label\">Project history<\/h2>\n<p>Over its lifetime Tornado Cash processed more than $3.5bn in assets and collected over $17.7m in fees, serving more than 57,000 unique users.<\/p>\n<p>In 2021 Tornado Cash smart contracts were deployed on other popular blockchains: BNB Chain, Polygon, Avalanche, Gnosis, Arbitrum and Optimism. Even so, the largest share of deposits remained on Ethereum.<\/p>\n<p>In December 2021 Tornado Cash announced Nova, a major upgrade on Gnosis that, unlike the original protocol, enabled deposits and withdrawals of arbitrary amounts of ETH while maintaining privacy and providing \u201cshielded\u201d transfers within pools.<\/p>\n<\/div>\n<div class=\"wp-block-text-wrappers-cards single_card\">\n<h2 class=\"card_label\">Tornado Cash\u2019s role in laundering stolen crypto<\/h2>\n<p>Founders of crypto mixers say they play an important role in protecting user and investor privacy. Law-enforcement agencies counter that such services are often used to launder the proceeds of organised crime.<\/p>\n<p>Throughout Tornado Cash\u2019s operation there were numerous instances of the service being used as a \u201claundromat\u201d for stolen crypto. A few from 2022:<\/p>\n<ul class=\"wp-block-list\">\n<li>In January 2022, 4,600 ETH worth $15m were stolen from Singapore-based <a href=\"https:\/\/crypto.com\" target=\"_blank\" rel=\"noreferrer noopener\">Crypto.com<\/a> and then <a href=\"https:\/\/gizmodo.com\/hackers-launder-15-million-stolen-from-crypto-com-usin-1848382047\" target=\"_blank\" rel=\"noreferrer noopener\">laundered<\/a> through Tornado Cash.<\/li>\n<li>In March, hackers believed to be from North Korea stole $625m from the popular P2E game <a href=\"https:\/\/forklog.com\/en\/news\/what-is-axie-infinity-axs\">Axie Infinity<\/a>, one of the biggest hacks in crypto\u2019s history. At least part of the haul was <a href=\"https:\/\/www.coindesk.com\/tech\/2022\/04\/13\/ronin-exploiter-moved-21000-ether-to-tornado-cash-in-past-week\/\" target=\"_blank\" rel=\"noreferrer noopener\">laundered<\/a> via Tornado Cash.<\/li>\n<li>In June, Harmony\u2019s Horizon cross-chain bridge was hacked. Attackers stole about $100m, much of which went to Tornado Cash.<\/li>\n<li>In July, more than 1,300 ETH (about $1.48m) were stolen from the Omni lending protocol and sent to the mixer.<\/li>\n<\/ul>\n<p>Chainalysis, a blockchain-analytics firm, estimates that more than $3.5bn flowed through the mixer, of which up to $1.2bn were <a href=\"https:\/\/www.vice.com\/en\/article\/k7bqb9\/tornado-cash-is-crypto-hackers-favorite-way-to-cash-out-but-experts-say-it-can-be-traced\" target=\"_blank\" rel=\"noreferrer noopener\">directly linked<\/a> to thefts, hacks and other illicit activity.<\/p>\n<p>Elliptic experts say Tornado Cash was actively used to launder proceeds from NFT fraud.<\/p>\n<\/div>\n<div class=\"wp-block-text-wrappers-cards single_card\">\n<h2 class=\"card_label\">Why Tornado Cash was sanctioned<\/h2>\n<p>In August 2022 the mixer, together with related Ethereum and USDC addresses, was added to the <span data-descr=\"The US Treasury's Office of Foreign Assets Control\" class=\"old_tooltip\">OFAC<\/span> sanctions list. The blacklisted wallets held stablecoins, WBTC and ETH worth roughly $437m. Later, USDC on the mixer\u2019s addresses was frozen by its issuer, Circle.<\/p>\n<p>The stated reason was money laundering: US authorities say that since its creation, criminals <a href=\"https:\/\/home.treasury.gov\/news\/press-releases\/jy0916\" target=\"_blank\" rel=\"noreferrer noopener\">laundered more than $7bn<\/a> through Tornado Cash. North Korea\u2019s Lazarus Group used the mixer extensively.<\/p>\n<p>The sanctions blocked all property, users\u2019 funds and the Tornado Cash source code in the US and beyond, and prohibited US persons from using the service.<\/p>\n<p>Beyond cryptocurrency, Tornado Cash and its founders\u2019 GitHub repositories were effectively removed, Infura and Alchemy <span data-descr=\"Remote procedure call\" class=\"old_tooltip\">RPC<\/span> access was restricted, and some domains were taken down. As a result, the Tornado Cash website and related services stopped working. Uniswap blocked more than 250 addresses at the frontend level.<\/p>\n<figure class=\"wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter\">\n<div class=\"wp-block-embed__wrapper\">\n<blockquote class=\"twitter-tweet\" data-width=\"500\" data-dnt=\"true\">\n<p lang=\"en\" dir=\"ltr\">Here&#8217;s the list of Tornado Cash resources that were banned<\/p>\n<p>\u2014 Tornado Cash <a href=\"https:\/\/twitter.com\/github?ref_src=twsrc%5Etfw\">@GitHub<\/a> organization<br \/>\u2014 personal <a href=\"https:\/\/twitter.com\/github?ref_src=twsrc%5Etfw\">@GitHub<\/a> accounts of TC contributors<br \/>\u2014 all <a href=\"https:\/\/twitter.com\/search?q=%24USDC&#038;src=ctag&#038;ref_src=twsrc%5Etfw\">$USDC<\/a> on Tornado Cash contracts @circlepay <br \/>\u2014 <a href=\"https:\/\/twitter.com\/infura_io?ref_src=twsrc%5Etfw\">@infura_io<\/a> RPC<br \/>\u2014 @AlchemyPlatform RPC<br \/>\u2014 <a href=\"https:\/\/t.co\/SHvgEjTOMV\">https:\/\/t.co\/SHvgEjTOMV<\/a> domain <a href=\"https:\/\/twitter.com\/eth_limo?ref_src=twsrc%5Etfw\">@eth_limo<\/a><\/p>\n<p>\u2014 \ud83c\udf2a\ufe0f Tornado.cash \ud83c\udf2a\ufe0f (@TornadoCash) <a href=\"https:\/\/twitter.com\/TornadoCash\/status\/1557048526986780677?ref_src=twsrc%5Etfw\">August 9, 2022<\/a><\/p><\/blockquote>\n<p><script async src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script>\n<\/div>\n<\/figure>\n<\/div>\n<div class=\"wp-block-text-wrappers-cards single_card\">\n<h2 class=\"card_label\">The arrest of a Tornado Cash co-founder and alleged FSB ties<\/h2>\n<p>On August 12, 2022, one of the mixer\u2019s creators, developer Alexey Pertsev, was arrested in Amsterdam. He is suspected of laundering criminal proceeds using Tornado Cash. <\/p>\n<p>On August 20 a rally in Amsterdam called for Pertsev\u2019s release. The organisers argued the arrest set a dangerous precedent for holding open-source developers liable for misuse of their software.<\/p>\n<figure class=\"wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter\">\n<div class=\"wp-block-embed__wrapper\">\n<blockquote class=\"twitter-tweet\" data-width=\"500\" data-dnt=\"true\">\n<p lang=\"en\" dir=\"ltr\">\u201cOpen source is not a crime\u201d: over 50  gathered in Amsterdam today to protest the arrest of Alexey Pertsev, the developer accused of contributing to the now-sanctioned Tornado Cash protocol <a href=\"https:\/\/t.co\/Qx1f33Ftub\">pic.twitter.com\/Qx1f33Ftub<\/a><\/p>\n<p>\u2014 Jack Schickler (@jackschickler) <a href=\"https:\/\/twitter.com\/jackschickler\/status\/1561025750094041091?ref_src=twsrc%5Etfw\">August 20, 2022<\/a><\/p><\/blockquote>\n<p><script async src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script>\n<\/div>\n<\/figure>\n<p>A Telegram group, <a href=\"https:\/\/t.me\/+0tKJW0Xoolo3M2Ri\" target=\"_blank\" rel=\"noreferrer noopener\">FreeAlex Public Group<\/a>, with more than 750 members, was set up to campaign for Pertsev\u2019s release and the lifting of sanctions on the project.<\/p>\n<p>In late August 2022, analytics firm Kharon published research suggesting Pertsev may have ties to Russian security services. According to the researchers, in 2017 the future Tornado Cash creator worked at \u201cDigital Security\u201d, which provides material and technical support to the FSB. Pertsev\u2019s wife, Ksenia Malik, denied the claim.<\/p>\n<\/div>\n<div class=\"wp-block-text-wrappers-cards single_card\">\n<h2 class=\"card_label\">Industry reaction and the legality of the sanctions<\/h2>\n<p>Immediately after the sanctions, a proposal appeared in the Tornado Cash DAO to sue OFAC for overreach. In early September, six users filed suit against the US Treasury, which includes OFAC, in the Western District of Texas. Coinbase backed the case.<\/p>\n<p>The civil-liberties group Coin Center also <a href=\"https:\/\/coincenter.substack.com\/p\/in-sanctioning-tornado-cash-itself\" target=\"_blank\" rel=\"noreferrer noopener\">argues<\/a> that officials exceeded their authority:<\/p>\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p>\u201cThe sanctions \u2026 say that Americans cannot use intellectual property (i.e., the Tornado Cash code) in which its authors do not even have an economic interest. On the one hand, the software was released under licences for public use, so no American paid for it in the past and will not pay in the future \u2026 Copies of the software are already installed on the computer of anyone who connects to the Ethereum network. A fitting metaphor would be if sanctions were imposed on some Iranian author, and Americans who already have copies of his book were forbidden to read them.\u201d<\/p>\n<\/blockquote>\n<p>Other industry figures also criticised the authorities. Cardano founder Charles Hoskinson said developers should not be held responsible for criminals\u2019 use of their code: <\/p>\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p>\u201cIt\u2019s like writing a book on making cyanide or building a bomb. Authors cannot control how this information will be used [\u2026]. Therefore, having created code for a protocol, a developer should not be considered an accomplice. He simply wrote code that was technically used by wrongdoers.\u201d<\/p>\n<\/blockquote>\n<p>Kraken CEO Jesse Powell called the actions against Tornado Cash \u201cunconstitutional\u201d.<\/p>\n<p>Coinbase CEO Brian Armstrong <a href=\"https:\/\/blog.coinbase.com\/defending-privacy-in-crypto-e09db33dece8\" target=\"_blank\" rel=\"noreferrer noopener\">added<\/a> that the sanctions violated the right to privacy. Instead of finding and punishing actual criminals, law enforcement simply shut down a service they used\u2014penalising users who did not want to reveal their identities but were not engaged in illegal activity.<\/p>\n<\/div>\n<div class=\"wp-block-text-wrappers-cards single_card\">\n<h2 class=\"card_label\">Permission to withdraw cryptocurrency from Tornado Cash<\/h2>\n<p>Under public pressure, the US Treasury allowed users of the sanctioned service to withdraw funds from blacklisted addresses. This requires a special licence, obtainable by providing officials with information about the sender and recipient wallets, operations, hashes, transfer amounts, and the date and time of transactions.<\/p>\n<p>OFAC also noted that \u201cinteraction with open-source code in itself [\u2026] is not prohibited\u201d if it does not involve illegal transactions. Coin Center called the concession a \u201cpyrrhic victory\u201d, noting that the regulator would continue to block specific addresses. Meanwhile, members of the crypto community <a href=\"https:\/\/twitter.com\/preston_vanloon\/status\/1569726055736397825\" target=\"_blank\" rel=\"noreferrer noopener\">urged GitHub to restore repositories<\/a> linked to Tornado Cash.<\/p>\n<\/div>\n<div class=\"wp-block-text-wrappers-cards single_card\">\n<h2 class=\"card_label\">Further reading<\/h2>\n<p><a href=\"https:\/\/forklog.com\/en\/news\/what-is-etherscan\">What is Etherscan?<\/a><\/p>\n<p><a href=\"https:\/\/forklog.com\/en\/news\/what-is-a-merkle-tree\">What is a Merkle tree?<\/a><\/p>\n<p>What is the Tor browser, and how do you use it?<\/p>\n<p><a href=\"https:\/\/forklog.com\/en\/news\/what-is-a-vpn\">What is a VPN?<\/a><\/p>\n<p><a href=\"https:\/\/forklog.com\/en\/news\/what-is-taproot\">What are Schnorr signatures? What is Taproot?<\/a><\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>Why do experts think the US overreached in blacklisting Tornado Cash? What are the charges against its co-founder Alexey Pertsev? Is there any chance users will recover more than $430m in frozen crypto? Answers, in brief.<\/p>\n","protected":false},"author":1,"featured_media":37787,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"select":"1","news_style_id":"1","cryptorium_level":"2","_short_excerpt_text":"","creation_source":"","_metatest_mainpost_news_update":false,"footnotes":""},"categories":[2113],"tags":[2120,2126,1256,1314],"class_list":["post-37786","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-cryptorium","tag-101-anonymity","tag-kriptorium-ethereum","tag-privacy-and-personal-data","tag-tornado-cash"],"aioseo_notices":[],"amp_enabled":true,"views":"174","promo_type":"1","layout_type":"1","short_excerpt":"","is_update":"","_links":{"self":[{"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/posts\/37786","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/comments?post=37786"}],"version-history":[{"count":1,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/posts\/37786\/revisions"}],"predecessor-version":[{"id":37788,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/posts\/37786\/revisions\/37788"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/media\/37787"}],"wp:attachment":[{"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/media?parent=37786"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/categories?post=37786"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/tags?post=37786"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}