Tornado Cash Is Now a Virtual Currency Mixer

Tornado Cash Is Now a Virtual Currency Mixer

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Tornado cash is an open source copyright privacy service that works on the Ethereum blockchain. It is designed to make it difficult for law enforcement to link a person’s copyright transactions back to their identity. It works by allowing users to deposit and withdraw using different addresses, in a way that makes it impossible for the withdrawal address to be linked back to the original deposit address. In the past, tornado cash has been used by criminals to launder money, but it is also widely used by ordinary people who want to protect their blockchain privacy.

The US Treasury has now designated tornado cash as a “virtual currency mixer.” This means that any US citizen who wants to use it will need to get a special license from OFAC in order to do so. This could make it very hard for them to use the service in practice.

OFAC’s designation of the service follows a report by researchers at the University of Illinois at Urbana-Champaign who demonstrated that the Tornado Cash code was able to reveal the identities of people who deposited into it. They did this by analyzing the Ethereum blockchain, looking for data points that could be linked back to the original deposits. They found that there was a clear correlation between the amount deposited into the pool and the total amount of tokens withdrawn from it.

In addition, they found that the code of the Tornado cash ipfs pool smart contract contained a Zero Knowledge Proof (ZKP). This is a method that allows one party to prove something to another without conveying any additional information in the process. The researchers concluded that the ZKP in the Tornado Cash pool contract allowed it to link the deposit and withdrawal addresses of people who used the service.

Tornado Cash’s founders have been arrested on charges of facilitating cybercrime and money laundering. They have been accused of running a service that was used by the Lazarus Group, a sanctioned North Korean hacking organization, to launder hundreds of millions of dollars in stolen copyright.

Many people believe that if Tornado Cash is banned, other similar services will spring up to take its place. However, this is unlikely because the Tornado Cash service is decentralized, operating through smart contracts on the Ethereum blockchain. As a result, it would be extremely difficult for law enforcement to shut down the service by imposing sanctions on its developers. If the government does succeed in blocking access to this service, however, then other copyright businesses, DeFi platforms, and financial institutions that process virtual currencies will need to take steps to avoid processing any funds that originate at the designated Tornado Cash pools. They will need to make sure that they are not accepting deposits or withdrawals from the affected addresses, even if those addresses were only used once. They will also need to ensure that they are not accepting any deposits or withdrawals from other addresses that have been sanctioned by OFAC.

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