Tornado Cash, launched in 2019, is a decentralized crypto mixer designed to enhance transaction privacy on public blockchains by concealing the on-chain link between senders and receivers. It utilizes zero-knowledge proofs to support anonymous transactions while functioning entirely on-chain through immutable smart contracts. Despite its privacy benefits, Tornado Cash faced sanctions from the U.S. Treasury on August 8, 2022, due to allegations of facilitating money laundering and supporting cybercrime, notably associated with North Korean hackers. The sanctions marked a controversial precedent as it was the first occasion when a code was blacklisted rather than an individual or organization. Although the protocol continued operating through decentralized technologies, developers were arrested and charged with facilitating illicit financial flows. In January 2025, a court ruling led to the repeal of these sanctions, restoring access to Tornado Cash, but the debate over financial privacy versus regulatory oversight remains unresolved. The future of Tornado Cash could evolve as its governance structure attempts to address regulatory concerns while preserving user autonomy.

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