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About this paper
Endong Liu, Mark Ryan, Liyi Zhou, Pascal Berrang
An Ethereum-wide analysis of Tornado Cash sanctions from August 2022 to March 2025 finds that sanctions cut deposit activity by 71.03% but did not prevent continued laundering, cross-chain movement, or protocol-level evasion. Tracking the provenance of funds with a continuous impurity score reveals gaps in block-builder and application-layer enforcement, while a documented dusting attack shows how binary taint rules can affect addresses controlling far larger balances.
Key insights
- Sanctions suppressed visible Tornado Cash usage without removing the underlying ability to launder funds: deposits fell 71.03%, yet Tornado Cash appeared in 47 of 60 laundering-related security incidents.
- Direct censorship was stronger than derived-fund screening; block producers that rejected explicit Tornado Cash interactions generally did not reject transactions from addresses holding Tornado Cash-origin funds.
- Fund provenance is better represented continuously than categorically. A dusting incident involving about 12 ETH reached addresses controlling over 9 million ETH, illustrating the risk of treating any exposure as equivalent taint.
Summary by alphaXiv.
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