The chief scientist at Chainalysis, Jacob Illum, has stated that it is still too early to fully understand the impact of the sanctions placed on cryptocurrency mixer Tornado Cash. He explained that more time is needed to see how the world responds to the ban and what alternatives people turn to. However, Illum also noted that the ban has created an opportunity for new “junior mixers” to emerge and fill the void left by Tornado Cash.
According to a report by SlowMist, a significant portion of stolen funds on the Ethereum network were transferred to Tornado Cash in the first half of 2022. The ban on Tornado Cash by the US Treasury Department means that US citizens or entities could face criminal or civil penalties for interacting with the mixer. Over 40 cryptocurrency addresses linked to Tornado Cash have been added to the Office of Foreign Asset Control’s Specially Designated Nationals list.
Chainalysis data shows that the total daily value received by crypto mixers reached a new all-time high of $51.8 million in April. However, Todd Lenfield, the country manager for Australia and New Zealand, pointed out that if the liquidity for mixers is not available, it significantly limits their capabilities.
When asked about the level of sophistication of law enforcement agencies in dealing with crypto-related crime, Illum highlighted the need for improved blockchain-related training. Lenfield mentioned that authorities are beginning to build capabilities around cryptocurrencies, such as the establishment of a cryptocurrency unit by the Australian Federal Police.
Recently, Chainalysis assisted law enforcement in recovering $30 million in crypto stolen in the Ronin Bridge hack, which was carried out by the North Korean-linked Lazarus Group. Tornado Cash was used to launder the stolen assets in this case.