Tornado Cash: Why they are Bad for Privacy

The Tornado Cash cryptocurrency mixer has been prohibited by the US Department of Treasure due to claims that it has been used to launder more than $7 billion in cryptocurrencies since its inception in 2019. Widespread anger at the US government has been generated by the mixer prohibition. Privacy supporters refer to it as a tool for “anonymity,” while the US government asserts that it is primarily used for illegal activity and money laundering. Today, we’ll describe the technology underlying these mixers and how they’re used to launder money.

Coin Mixers

A cryptocurrency mixer called Tornado Cash (Tornado) operates on the Ethereum network. By making it very challenging to track down cryptocurrency wallets, it promotes anonymous transactions. Thousands of transactions are received by the mixer, which mixes them before sending them to a specific wallet.

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Consider the scenario when you want to move some Bitcoin to another wallet. Before reaching the recipient’s wallet, these monies will first be transmitted in fractions to hundreds of thousands of wallets utilizing mixers. It makes getting the crypto wallet’s final address all but impossible.

Users may pick a network to deposit or withdraw their cryptocurrency using Tornado Cash by connecting their crypto wallets, such as MetaMask or Walletconnect. The following tokens are available for deposits: ETH, DAI, cDAI, USDC, USDT, and WBTC.

The majority of coin mixers are non-custodial, which means they don’t take custody of your money. These services are impartial, which means they don’t rely on any middlemen or other parties to carry out transactions. As seen in the instance of Larazus Group, this makes them a favorite tool for fraudsters seeking to launder stolen cryptocurrency.

Privacy Advocates: “Against free will”

The prohibition of currency mixers, according to privacy activists, highlights the right to anonymity. A crypto advocacy organization called Coin Center stated that it is looking into avenues for contesting the US government’s decision. The Coin Center’s founders, Jerry Brito and Van Valkenburgh stated that they are “still looking into the legal and constitutional consequences.”

“The sanctions laws are being used to put a restriction on the exchange of money with everyone, not just those who have been convicted of a crime or even those who are suspected of supporting terrorism. This is a restriction on anyone who wants to safeguard their privacy using their own money and a publicly available software tool, even for otherwise legal and private reasons, stated Brito in a blog post.

On Twitter, cryptocurrency enthusiast Jeff Coleman described how Tornado Cash gives legal anonymity. He used the desire to give to Ukraine as an excellent illustration of a legitimate need for financial secrecy. “Even though your local administration is fully behind you, you might not want the Russian government to have full details of your daily activities.

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