The value of Tornado Cash is decreasing, not due to market factors but because of recent controversies. The Office of Foreign Assets Control recently added Tornado Cash to its list of Special Designated Nationals. That means no one from the United States may use the token.
By taking this action, OFAC has effectively banned Tornado Cash from participating in one of the most important cryptocurrency markets.
Many owners of Tornado Cash’s native coin, TORN, also liquidated their investments in response to the news. From its high closing of $30.25 on August 7th, TORN has fallen 87.03% to its current price.
Tornado Cash Linked To Nefarious Activities
Even before the OFAC decided to add Tornado Cash to its special list, TORN had been linked to multiple high-value crypto crimes.
The Lazarus Group, perpetrators of one of the largest crypto thefts in history, employed TORN as part of their plot to conceal the true origin of their stolen funds. The breach was carried out on the Ronin Network, an Ethereum-based sidechain.
In March of 2022, the network hosted game Axie Infinity, which saw its highest player count. Because of this, malicious actors like the Lazarus Group were able to zero in on the system and the game with relative ease. The theft led to the loss of 173,600 Ether and 25.5 million USDC.
The total dollar amount is $625,000,000. Later this year, the OFAC will penalize the project and all connected wallets due to this attack.
Sanctions Deal A Heavy Blow On TORN
It is hardly surprising that criminal actors have used Tornado Cash to launder stolen cryptocurrency. In the DeFi domain, mixers are special programs that ostensibly enhance privacy by blending transactions, so obscuring the money’s path from point A to point B.
In 2019, more than $7 billion worth of cryptocurrency was laundered using Tornado Cash, according to a U.S. Treasury Department report.
As of this writing, the sanctions have a significant impact on TORN. According to a source, there are currently only 100 unique users on the network.
After the announcement of the sanctions, transactions in excess of $100,000 became practically nonexistent.
TORN is trading just above the 38.20% Fib retracement level at the moment. This level will support the price of the crypto due to the close correlation between the buying and selling quantities of bulls and bears.
As the sanction dismantles the project, it is only a matter of time till it hits zero.
Crypto total market cap at $918 trillion on the daily chart | Source: TradingView.com
Featured image from The Daily Hodl, Chart: TradingView.com