What Is Tornado Cash (TORN)?

Tornado Cash (TORN) is a decentralized as well as non-custodial privacy solution that is built on Ethereum. While Tornado Cash was developed based on open source research by the Zcash team (a privacy coin), the protocol allows users to send ETH and ERC-20 deposits through its smart contract service.

Once you send an ETH or ERC-20 deposit to Tornado Cash, you can withdraw your crypto through a new address. Once the asset is withdrawn by the new address, there’s no way to link the withdrawal to the deposit and this, in turn, ensures asset privacy. 

The TORN protocol is owned by the community — in May 2020, the Tornado Cash team relinquished control of the protocol’s multisig wallet through a contract update known as a Trusted Setup Ceremony. As of then, the founders don’t have any control of Tornado Cash, and it is considered a fully decentralized protocol.

The TORN token is an ERC-20 token with a fixed supply that allows for holders to make proposals and vote for changes within the protocol. Users of Tornado Cash accrue Anonymity Points as they interact with the protocol, which are then deposited into a shielded account. When they collect enough Anonymity Points, they can convert them into TORN tokens in a similarly protected process.

How Does Tornado Cash Work?

Using Tornado Cash, transactions are mixed using zero-knowledge proofs, and these completely obfuscate the transaction information. Tornado Cash is also a decentralized service, and it is run through smart contracts, so no centralized third party can take custody of the funds throughout the mixing process, as can be the case with other mixing methods. 

If you are interested in using Tornado Cash, here’s how it works. You need to deposit funds to Tornado Cash, after which it will generate a random key and deposit your ERC-20 tokens. To make a withdrawal at some point in the future, you will need to submit proof of having the valid key.

Start by making a deposit, and choosing an ERC-20 token as well as the amount to deposit. Click on “Deposit” and confirm. 

You can withdraw by using either a crypto wallet like MetaMask or via Relayer. If you choose to use a wallet, make sure that you generate a new address in order to continue to protect your privacy. Another way is to use Relayer, which avoids any possibility of recording the transaction publicly attached to you on the blockchain; once you generate a new Ethereum address, Relayer will deposit your funds, and charge you a network fee in ETH.

When you’ve decided how you want to withdraw your funds, enter your deposit’s secret and click on the “Settings” menu there. Here, you’ll choose a wallet option, and save it. Then you have to just enter your address and click on “Withdrawal.”

What’s tornado cash ban all about?

the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) sanctioned virtual currency mixer Tornado Cash, which has been used to launder more than $7 billion worth of virtual currency since its creation in 2019. This includes over $455 million stolen by the Lazarus Group, a Democratic People’s Republic of Korea (DPRK) state-sponsored hacking group that was sanctioned by the U.S. in 2019, in the largest known virtual currency heist to date. Tornado Cash was subsequently used to launder more than $96 million of malicious cyber actors’ funds derived from the June 24, 2022 Harmony Bridge Heist, and at least $7.8 million from the August 2, 2022 Nomad Heist. Today’s action is being taken pursuant to Executive Order (E.O.) 13694, as amended, and follows  OFAC’s May 6, 2022 designation of virtual currency mixer Blender.io (Blender).

“Today, Treasury is sanctioning Tornado Cash, a virtual currency mixer that launders the proceeds of cybercrimes, including those committed against victims in the United States,” said Under Secretary of the Treasury for Terrorism and Financial Intelligence Brian E. Nelson. “Despite public assurances otherwise, Tornado Cash has repeatedly failed to impose effective controls designed to stop it from laundering funds for malicious cyber actors on a regular basis and without basic measures to address its risks. Treasury will continue to aggressively pursue actions against mixers that launder virtual currency for criminals and those who assist them.”

wanna read more? click on link below :

Link

Methodology

now we are intrested to see which addresses still using tornado despite the sanctions

we used address labels table to find tornado cash addresses and looked into transactions and transfers of ethereum for both eth table and tokens table and joining them together to get best results which shown below :

while im writing this review 193 addresses still using the service

in all time 0x722122df12d4e14e13ac3b6895a86e84145b6967 was the top address of transactions count to tornado cash with over 67000 transactions but after sanctions there is no sign of it instead second active address of senders to tornado 0xd90e2f925da726b50c4ed8d0fb90ad053324f31b has continued working with service and did 576 transactions in past 3 days.

now we want to look at value and frequency of tokens which sent to tornado . i seperated ethereum sending with other tokens . first lets see other tokens :

above charts is other tokens sent to service after ban based on transactions count , transaction value of token and value in usd.

now lets see this metrics in all time :

finally i show the these metrics for ethereum transfers , both in last three days i mean after sancions and all time

Conclusion

we can see a huge decrease in number and value of transactions after the sanctions . but its good to say what does this sanctions mean to other stable coins and crypto currencies? The Treasury’s decision could end up significantly altering the way users engage with crypto. It also sets the stage for a slew of fierce legal and rhetorical battles between the crypto industry and the U.S. government.

also we can see how diffrent groups use the service with diffrent tokens and wrapped tokens