Tornado Cash Sees Drop In Activity After U.S. Treasury Sanctions


Tornado Cash is declining in value, not because of market factors but because of recent controversies. OFAC recently added Tornado Cash to its list of Special Designated Nationals. This means that no one from the United States may use the token.

By taking this action, OFAC effectively banned Tornado Cash from participating in one of the most important cryptocurrency markets.

Several owners of Tornado Cash’s original coin, TORN, have also divested their investments in response to the news. From its closing high of $30.25 on August 7, TORN is down 87.03% from its current price.

Tornado Cash Connected to Nefarious Activities

Even before OFAC decided to add Tornado Cash to its own list, TORN has been linked to several high-value crypto crimes.

The Lazarus Group, the perpetrators of one of the largest cryptocurrency heists in history, used TORN as part of their plot to hide the true origin of their stolen funds. The breach was carried out on the Ronin Network, an Ethereum-based side chain.

In March of 2022, the network hosted the game Axie Infinity, which saw the highest number of players. Because of this, malicious actors like the Lazarus Group have been able to focus on the system and the game with relative ease. The theft resulted in the loss of 173,600 Ether and $25.5 million.

The total dollar amount is $625,000,000. Later this year, OFAC will sanction the project and all connected portfolios for this attack.

Chart: TradingView.com

Sanctions deal a heavy blow to Turner

It is not surprising that criminal actors use Tornado Cash to launder stolen cryptocurrency. In the field of DeFi, mixers are proprietary software that ostensibly enhance privacy by mixing transactions, thus obscuring the path of money from point A to point B.

In 2019, more than $7 billion in cryptocurrency was laundered using Tornado Cash, according to a US Treasury report.

As of this writing, the sanctions have had a huge impact on TORN. According to a source, there are currently only 100 unique users on the network.

After the sanctions were announced, transactions over $100,000 were practically non-existent.

TORN is trading above the 38.20% Fibonacci retracement level at the moment. This level will support the price of the cryptocurrency due to the close correlation between the buying and selling volumes of bulls and bears.

Since the penalty breaks up the project, it is only a matter of time until it reaches zero.

Crypto total market cap at $918 trillion on the daily chart | Source: TradingView.com

Featured image from The Daily Hodl, Chart: TradingView.com



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