The Impact of Sanctions on decentralised Privacy Tools: A Case Study of Tornado Cash
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arXiv
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| Auteurs principaux: | , , |
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| Format: | Preprint |
| Publié: |
2025
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| _version_ | 1866914162690490368 |
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| author | Cristodaro, Raffaele Kraner, Benjamin Tessone, Claudio J. |
| author_facet | Cristodaro, Raffaele Kraner, Benjamin Tessone, Claudio J. |
| contents | This paper investigates the impact of sanctions on Tornado Cash, a smart contract protocol designed to enhance transaction privacy. Following the U.S. Department of the Treasury's sanctions against Tornado Cash in August 2022, platform activity declined sharply. We document a significant and sustained reduction in transaction volume, user diversity, and overall protocol utilization after the sanctions were imposed. Our analysis draws on transaction data from three major blockchains: Ethereum, BNB Smart Chain, and Polygon. We further examine developments following the partial lifting and eventual removal of sanctions by the U.S. Office of Foreign Assets Control (OFAC) in March 2025. Although activity partially recovered, the rebound remained limited. The Tornado Cash case illustrates how regulatory interventions can affect decentralized protocols, while also highlighting the challenges of fully enforcing such measures in decentralized environments. |
| format | Preprint |
| id |
arxiv_https___arxiv_org_abs_2510_09443 |
| institution | arXiv |
| publishDate | 2025 |
| record_format | arxiv |
| spellingShingle | The Impact of Sanctions on decentralised Privacy Tools: A Case Study of Tornado Cash Cristodaro, Raffaele Kraner, Benjamin Tessone, Claudio J. Cryptography and Security Social and Information Networks This paper investigates the impact of sanctions on Tornado Cash, a smart contract protocol designed to enhance transaction privacy. Following the U.S. Department of the Treasury's sanctions against Tornado Cash in August 2022, platform activity declined sharply. We document a significant and sustained reduction in transaction volume, user diversity, and overall protocol utilization after the sanctions were imposed. Our analysis draws on transaction data from three major blockchains: Ethereum, BNB Smart Chain, and Polygon. We further examine developments following the partial lifting and eventual removal of sanctions by the U.S. Office of Foreign Assets Control (OFAC) in March 2025. Although activity partially recovered, the rebound remained limited. The Tornado Cash case illustrates how regulatory interventions can affect decentralized protocols, while also highlighting the challenges of fully enforcing such measures in decentralized environments. |
| title | The Impact of Sanctions on decentralised Privacy Tools: A Case Study of Tornado Cash |
| topic | Cryptography and Security Social and Information Networks |
| url | https://arxiv.org/abs/2510.09443 |