In the week following the sanctioning of the Tornado Cash website by the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC), the price of the token underpinning the system is down 56%, starting the week at a high of $31.56 and ending the week at a low of $13.09, according to CoinMarketCap.
Tornado Cash (TORN) is an ERC20 token and the native token of the Tornado Cash DAO, used to manage governance and voting. It’s currently the 691st largest cryptocurrency, with a market capitalization of $15.5 million.
After the U.S. Treasury issued its sanctions and Github took the Tornado Cash website offline by removing its repository from the site, the token price began to slide.
Launched in 2019, Tornado Cash is a blockchain protocol for sending and receiving anonymous transactions by mixing Ethereum tokens with a pool of other tokens, anonymizing the user.
In its sanctioning of Tornado Cash, the U.S. Treasury cited its use by the North Korean hacker group Lazarus Group and the laundering of over $103.8 million from the hacks of the Horizon Harmony Bridge and Nomad Token Bridge earlier this summer.
Following a debate by the Tornado Cash community, the Discord server for the group disappeared, and unknown persons took the forum on the Tornado Cash community website offline as well. At the same time, a member of the developer group behind Tornado Cash was taken into custody by law enforcement in the Netherlands.
They arrested the developer of tornado cash. 🚨
I repeat: a man was arrested for writing code that served as a public good for people to maintain their privacy online.
They put a man in jail because bad people used his open source code.
This cannot stand in any free society.
— RYAN SΞAN ADAMS – rsa.eth 🦇🔊 (@RyanSAdams) August 12, 2022
The U.S. Treasury’s Fiscal Information and Investigation Service (FIOD) said its criminal investigation into Tornado Cash began in June 2022.
This crypto winter appears to be especially harsh for the Tornado Cash community. Coupled with the current bear market, sanctions, shutdowns, and arrests seem to have dealt a body blow to the project as holders continue to flee.