The latest report from CertiK Alert reveals that Tornado Cash remains the go-to choice for those involved in money laundering using cryptocurrencies, despite being on the OFAC’s sanctions list. Tornado Cash’s analysis shows that it was used in 60 out of 224 recorded incidents in the first quarter of 2024, highlighting its widespread use in blockchain-based financial crime.
Tornado Cash, also known as the Ethereum Virtual Machine (EVM) implemented decentralized cryptocurrency mixer, is the preferred tool for crypto scams. This feature allows users to anonymize the origins of their cryptocurrency transactions, making it difficult to trace the source of funds. It serves as a cover for those looking to hide their tracks and avoid punishment.
In order to combat these illicit activities, it is crucial to go beyond traditional offline banking systems and implement anti-money laundering (AML) techniques. These techniques aim to eliminate asset tracking by individuals and prevent them from escaping societal punishments.
Despite Tornado Cash being responsible for many of these illicit activities, the majority of the funds involved were funneled directly to exchanges. According to CertiK Alert, these transactions contributed nearly $220 million to the underground money pool. As a result, authorities have devised a plan to freeze a portion of these funds.
Interestingly, a large portion ($69 million) has already been laundered through Tornado Cash. It is clear that Tornado Cash is widely used, but the average size of each transaction is smaller compared to direct transfers.
The aviation industry is also facing regulation and its consequences. The U.S. authorities have imposed sanctions that extend to popular decentralized finance platforms such as AAVE, Uniswap, dYdX, and Balancer. This shows that regulators and enforcement agencies are dedicated to curbing illegal financial transactions in the digital age.
CertiK Alert is currently focused on developing real-time alerts to identify and act upon suspicious transactions immediately. They recommend implementing new and strict surveillance and compliance rules to combat the increasing use of advanced wallets like Tornado Cash. The crypto industry has an obligation to adopt technological advancements and strict monitoring standards to prevent misuse of its platforms for money laundering and fraudulent activities.
It is important to note that criminals in the sector are constantly evolving their methods, and the industry and regulators must stay ahead of them. Finding the balance between safety and public interest requirements in the rapidly evolving financial transactions environment is an ongoing challenge.
