Traditionally, let’s start with an explanation. Tornado Cash is a mixer that allows you to cover your tracks with respect to certain cryptocurrencies. It works on the principle of a cryptocurrency exchange. You first need to fund it, then provide a new address to receive coins and request a withdrawal. Cryptocurrencies received from different users are intermingled with each other, making it almost impossible to trace the movement from one address to another.

In addition, it should be noted that payments are made in unequal portions, which also makes it difficult for blockchain analysts to work with.

Tornado Cash’s interface

Tornado Cash is an automated decentralised platform, so it operates independently of what happens to its developers and government guidance. In fact, because of this, it is often used by hackers who steal other people’s coins. In this way, they throw analysts and law enforcement agencies off the scent.

However, this scheme will now be difficult for the criminals. We are talking about blocking certain addresses according to the sanctions list.

Restrictions in the cryptocurrency world

On the one hand, the platform is supposed to help its clients maintain anonymity. However, it’s not that simple: it seems that Tornado Cash’s management doesn’t want to clash with law enforcement. Here’s a quote from the company’s official publication on the matter.

Tornado Cash uses the Chainalysis smart contract to block access to the app to addresses on the Office of Foreign Assets Control (OFAC) sanctions list. Maintaining financial privacy is necessary to preserve our freedom, but it should not come at the cost of non-compliance with legal requirements.

Tornado Cash interface

According to Decrypt’s sources, Tornado Cash operates on the principle of a “mixer”, which helps to confuse the transaction trail in the blockchain from sender to recipient. First, the user deposits their funds into a smart contract, where they are “mixed” with the deposits of other customers, and then withdrawn to the recipient’s address.

The platform itself remains “unchanged” and uncensored – the only exceptions are addresses officially banned by the government. The smart contract from Chainalysis helps identify them. It works in both Etherium and the Binance Smart Chain, Avalanche, Polygon and Optimism networks. Paired with the smart contract is the Chainalysis API, which completes the address verification process.

Naturally, all of this is also censorship in its own way, but Tornado Cash has never been positioned as a platform for “complete anonymity”. This, too, coincides with the values of most crypto-enthusiasts – ordinary users deserve anonymity, but not criminals or terrorists. Admittedly, the formation of the sanctions list is entirely up to OFAC and the government.


It is important to understand that developers cannot prohibit a certain address from interacting with a smart contract inside the blockchain because of the immutability of the latter. In this case, they would have to shut down the current platform and launch a new smart contract with new restrictions.

Accordingly, in this case, the ban is only relevant when interacting with Tornado Cash via its frontend, i.e. working with the decentralised application itself via the website. However, there will of course be no blocking within the smart contract.


How Tornado Cash works

The announcement regarding address blockchain was made the day before, but the rules described in it have been in place at Tornado Cash for at least a few months. For example, back in January – before the aggravation of geopolitical relations between Russia and Ukraine, which led to increased sanctions pressure – Tornado Cash representatives claimed to comply with OFAC regulations. The government agency blocked the cryptocurrency wallets of suspected terrorists, criminals and people associated with certain authoritarian regimes.

Except that there is a nuance: users under sanctions can simply make another wallet and work freely with the platform. Moreover, creating a crypto-wallet is a matter of a couple of minutes, and one person can generate an unlimited number of crypto-addresses.

In such a case, to fight anonymity, one could simply limit the operation of such “mixers”, but Tornado Cash is not going to be shut down. Moreover, according to the platform’s co-founder Roman Semenov, it is virtually impossible to do so. Developers “don’t have too much power over smart contracts compared to ordinary users”. This is a quote from Semenov from his recent interview, in which, unfortunately, the topic of sanctions was not covered in detail.


We believe that such a decision of the developers was the right one after all. Obviously, in this case we are only talking about criminals who have already been placed on the sanctions lists, and thus have had time to do some damage. In addition, the authors of the project only limit their access via the website, so that the decentralisation component of the smart contract and blockchain itself remains intact. That means that in the end the field of coins will not be so attractive for some criminals, which in addition will be good for its reputation.


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