In this report, we compared how much the performance of the Tornado.Cash mixer has changed in the first half of 2023 compared to the first half of 2022. As a reminder, on August 8, 2022, the Tornado.Cash mixer was sanctioned by the US Treasury Department. Thus, we compare the performance of the mixer before and after the imposition of sanctions against it, in the period of the first six months of 2022 and 2023.
This report covers 4 main Tornado.Cash pools:
- Tornado.Cash 100 ETH
- Tornado.Cash 10 ETH
- Tornado.Cash 1 ETH
- Tornado.Cash 0.1 ETH
The following chart shows a significant drop in the number of deposits for each of the pools in the first six months of 2023 compared to the first six months of 2022. This indicates that the mixer is still affected by the imposed sanctions and there has been a serious outflow of users from the mixer compared to the pre-sanctions period.
A similar situation happens with withdrawals.
Let’s look at the ratio of the number of deposits made in these four pools. Their ratio has not changed much in 2023. As before, users send the largest number of deposits to the Tornado.Cash 10 ETH and Tornado.Cash 1 ETH pools, and therefore these pools provide the highest level of anonymization among all four pools under consideration. Interestingly, in 2023, the share of deposits sent to the Tornado.Cash 0.1 ETH pool increased from 13.1% to 19.6% by 6.5 points.
Also, the ratio of shares of the number of withdrawals from the Tornado.Cash mixer did not change much in 2023 compared to 2022. It is worth noting only a slight increase in the share of withdrawals from the Tornado.Cash 0.1 ETH pool, which is most likely due to an increase in the share of the number of deposits in the Tornado.Cash 0.1 ETH pool from the total number of deposits in all four pools under consideration.
Tornado Cash was sanctioned by OFAC as it is often used by hackers to launder stolen crypto assets. The dirtiest pool has always been the Tornado.Cash 100 ETH as the perpetrators tend to send into it the most part of stolen assets, using other pools only to launder the rest. Therefore, we compare how the share of dirty funds sent to the Tornado.Cash 100 ETH pool changed in the first half of the year 2023 compared to the first half of 2022.
There was a slight increase in the share of dirty deposits (by 3.2 percentage points from 45.0% to 48.2%). However, it is worth noting that the majority (62.9%) of the dirty deposits sent to Tornado.Cash 100 ETH is related particularly to North Korean hackers Ronin Bridge Hack and Harmony Horizont Bridge Hack.
Therefore, if we exclude these two cases, then the concentration of illicit funds in the Tornado.Cash 100 ETH pool will be significantly higher in 2023 compared to 2022. So, for example, if we look at the data on deposits in Tornado.Cash 100 ETH for the first quarters of 2022 and 2023, we can clearly see an increase in the concentration of illicit assets in the pool, despite the drop in the number of deposits in 2023.
This increase in the share of illicit assets happened due to a huge decrease in the number of clients of Tornado.Cash depositing clean assets into Tornado.Cash 100 ETH.
Based on all of the above, we can conclude that when sanctions were imposed against the Tornado.Cash mixer, a large number of law-abiding users suffered, who were deprived of the opportunity to obtain a certain level of privacy due to the Tornado.Cash mixer. At the same time, the sanctions against the mixer did not lead to the complete impossibility of money laundering by attackers through this service. In our opinion, in order to more effectively combat crimes related to the Ethereum network, a more flexible approach is needed than a ban on the use of mixers.