Tornado Cash

Tornado Cash (TORN) seeks to address privacy and anonymity challenges within the cryptocurrency sector, with a specific focus on transaction traceability. The project began in August 2019 as an experimental release known as Tornado Cash v1, eventually maturing into a fully decentralized, non-custodial protocol that enables private transfers.

Operating via smart contracts on the Ethereum network, the system ensures privacy by breaking the on-chain connection between sender and recipient addresses. This mechanism is commonly described as a “decentralized mixer.” Because the protocol is immutable, neither developers nor any other party can alter or tamper with transactions, providing users with a high degree of privacy assurance.

Tornado Cash was co-founded by Roman Semenov and Roman Storm. Semenov earned a degree in Quantum Statistics and Field Theory from Moscow State University. After graduation, he established two businesses in the social media and e-commerce sectors. He entered the cryptocurrency space in 2017, serving as Chief Software Architect for a foundation dedicated to Ethereum scalability. In 2018, Semenov launched PepperSec, a white hat security consulting firm, which paved the way for Tornado Cash.

Storm brings extensive experience in software, blockchain, and technology. His background includes roles as a Software Engineer at Marketron and Amazon, as well as serving as Chief Technology Officer for the POA Network. He also worked as a Blockchain Developer at Blockchainlabz.nz. Storm and Semenov jointly founded PepperSec and subsequently initiated Tornado Cash.

Tornado Cash operates as a fully permissionless system driven by self-executing code. In May of 2020, the developers eliminated their admin keys, ensuring they lack the capacity to view or modify any transactions on the protocol. The team maintains that their control is limited to posting code on GitHub, asserting that financial privacy is vital for freedom.

Co-founder Roman Semenov describes the transactions as “trustless and completely unstoppable” due to the MPC cryptographic technique used to remove the admin keys. This degree of anonymity allows transactions to possibly bypass sanctions.

The protocol faces frequent criticism for enabling hackers to hide stolen assets and has been identified as a tool for money laundering. Nevertheless, despite its high secrecy, some suggest that transactions might be traceable in scenarios involving large deposits combined with low liquidity.

As of August 2022, roughly 1.1 Million TORN tokens were in circulation. The protocol caps the maximum circulating supply at $10 million.

The whitepaper outlines the following distribution plan for TORN:

• 5% (500,000 TORN): Allocated as an airdrop to early users of Tornado.Cash ETH pools
• 10% (1,000,000 TORN): Reserved for anonymity mining within Tornado.Cash ETH pools, to be distributed linearly across 1 year
• 55% (5,500,000 TORN): Assigned to the DAO treasury, scheduled to unlock linearly over 5 years following a 3 month cliff
• 30% (3,000,000 TORN): Designated for founding developers and early supporters, set to unlock linearly over 3 years after a 1 year cliff

Operating on the Ethereum blockchain, Tornado Cash relies on zero-knowledge proofs for its security. Multiple professional auditing firms, such as Zeropool, have conducted audits of both the Tornado Cash protocol and its anonymity mining system.

Trading for $TORN started in February 2021, coinciding with an airdrop of 500,000 TORN, which represented 5% of the total supply.

TORN began trading at $214.29 and reached its peak value of $436.16 in February 2021, yet it has subsequently dropped by 95%.

Tornado Cash (TORN) is available for purchase on many major centralized and decentralized platforms, such as Binance, Gate.io, Uniswap, OKX, BingX, CoinW, Sushiswap, and Deepcoin.

On August 8th 2022, the United States officially sanctioned Tornado Cash following claims that the mixing service facilitated money laundering by American citizens. The U.S. Treasury Department alleges that more than $7 billion in digital assets were laundered via the platform over the preceding 3 years. These sanctions triggered a sharp decline in price, significant online mockery, and an arrest.

An anonymous user associated with Tornado Cash sent 0.1 ETH to the public wallets of celebrities and other prominent figures, potentially linking their accounts to the service and raising questions about the implications of these sanctions for cryptocurrency users. Regarding further legal consequences, a 29 year old software developer working on Tornado Cash was subsequently arrested.