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Tornado Cash price prediction: Will TORN survive US sanctions list?


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Tornado Cash (TORN) analysis and prediction – Photo: Shutterstock

The price for the Tornado Cash cryptocurrency TORN has plunged this week, falling by as much as 49.5% after the US Treasury’s Office of Foreign Assets Control (OFAC) sanctioned the service for money laundering.

TORN “has been used to launder more than $7 billion worth of virtual currency since its creation in 2019. This includes over $455 million stolen by the Lazarus Group, a Democratic People’s Republic of Korea (DPRK) state-sponsored hacking group that was sanctioned by the U.S. in 2019, in the largest known virtual currency heist to date,” according to a Treasury statement. “Tornado Cash was subsequently used to launder more than $96 million of malicious cyber actors’ funds derived from the June 24, 2022 Harmony Bridge Heist, and at least $7.8 million from the August 2, 2022 Nomad Heist.
“As a result of today’s action, all property and interests in property of the entity above, Tornado Cash, that is in the United States or in the possession or control of U.S. persons is blocked and must be reported to OFAC.”

The coin-mixing privacy protocol, which enables users to conceal their blockchain activity, received attention in January as hackers used it to shield stolen ether (ETH) from the Crypto.com exchange. 

What is Tornado Cash? In this article, we look at how the protocol works and the impact of the Treasury adding TORN to its sanctions list.

Tornado Cash provides transaction privacy 

Launched in 2019, Tornado Cash is a decentralised non-custodial service. Tornado is a Layer 2 protocol that aims to optimise the processing times and fees of Layer 1 blockchains such as Ethereum. The protocol was developed by the team behind ZCash (ZEC), a privacy coin that was a hard fork, or spin-off, from bitcoin (BTC), with support from the Ethereum community.

Tornado Cash uses smart contracts that work as pools, accepting deposits of tokens from a recipient address and withdrawals to a different destination address. By mixing the assets, the pools cut the on-chain link between addresses, making transactions anonymous. 

Users retain custody of their tokens while they’re in the pools. They have custody either by depositing tokens or registering to receive transfers. The strength of the protocol’s security and privacy depend on the volume of users in the pool. As more users mix transactions, the easier it is to preserve anonymity and privacy.

Privacy coins have emerged as a trend in cryptocurrency, with protocols such as Tornado Cash using Zero-Knowledge Succinct Non-Interactive Argument of Knowledge (zk-SNARK) to verify transactions. Zk-SNARK technology enables users to provide proof that they have permission to make a withdrawal without revealing their deposit and therefore their identity. 

The TORN token is the native governance token for the Tornado Cash protocol, used for voting on decisions about the development of the project. It’s an ERC-20 token with a fixed supply of 10 million coins. There are currently 1.1 million TORN coins in circulation.

Tornado Cash launched a new version of the protocol, Tornado Cash Nova, on 15 December 2021, enabling shielded transfers and withdrawals of arbitrary amounts of ether. Tornado Cash Nova runs on the Gnosis blockchain, which was previously known as the xDai blockchain.

In the first version with fixed-volume pools, each deposit to a pool generated a private note that worked as a private key giving users access to the funds. With Tornado Cash Nova, funds are linked from the pool to a wallet address directly, so no private key is needed.

Tornado Cash had previously offered fixed amount pools for six tokens – ETH, DAI, CDAI, USDC, USDT and WBTC – on the Ethereum blockchain. In June 2021, Tornado Cash became a cross-chain protocol, deploying its smart contracts on other blockchains and side chains and adding support for new tokens. Optimism was the most recent addition on 13 January.

Tornado Cash offers pools for the following blockchains and tokens

According to data compiled by blockchain Intelligence Platform AnChain.AI in January, more than $10bn in cryptocurrencies was processed through Tornado Cash in 2021, generating more than 127,000 smart contract transactions. 

AnChain.AI noted the potential for misusing the protocol’s privacy functionality: “AnChain.AI Labs has observed a rising trend of DeFi / NFT hackers that are adopting Tornado cash in their money laundering, including the recent $196 Million Bitmart exchange hack. Smart contracts have enabled more sophisticated Money Laundering techniques than Bitcoin UTXO based CoinJoin, and Privacy layer 1 blockchain like Monero, which imposes new technical challenges for law enforcement and regulators.”

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US Treasury blacklisting prompts privacy debate

On 8 August, the OFAC added Tornado Cash to its list of Specially Designated Nationals (SDNs) that are banned from transacting with US individuals and businesses.

“Despite public assurances otherwise, Tornado Cash has repeatedly failed to impose effective controls designed to stop it from laundering funds for malicious cyber actors on a regular basis and without basic measures to address its risks. Treasury will continue to aggressively pursue actions against mixers that launder virtual currency for criminals and those who assist them,” said Under Secretary of the Treasury for Terrorism and Financial Intelligence Brian E. Nelson, in the US Treasury’s statement.

“While the purported purpose is to increase privacy, mixers like Tornado are commonly used by illicit actors to launder funds, especially those stolen during significant heists.”

However, the move to sanction Tornado Cash raised concerns in the cryptocurrency community surrounding privacy and free speech.

Jerry Brito and Peter Van Valkenburgh, directors at cryptocurrency research and advocacy group Coin Center, wrote on 8 August that adding Tornado Cash to the SDN list amounted to “the sanctioning of a tool that is neutral in character and that can be put to good or bad uses like any other technology. It is not any specific bad actor who is being sanctioned, but instead it is all Americans who may wish to use this automated tool in order to protect their own privacy while transacting online who are having their liberty curtailed without the benefit of any due process.”

Tornado Cash's open-source code was removed from the GitHub software development service following the announcement. Tornado Cash co-founder Roman Semenov tweeted: "My @GitHub account was just suspended. Is writing an open source code illegal now?"

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“US Treasury puts privacy tool Tornado Cash on the sanctions list. This list is meant for people, not tech tools,” tweeted Muneeb Ali, co-founder of Layer 1 smart contact network Stacks and CEO of Bitcoin application developer Trust Machines. “Privacy tools are for every American.”

Ethereum co-founder Vitalik Buterin also weighed in, revealing that he had used Tornado cash to donate funds to Ukraine, tweeting: “I'll out myself as someone who has used TC to donate to this exact cause.”

TORN price plunges on blacklisting

The tornado cryptocurrency was announced in December 2020 and launched in February 2021 as the protocol’s governance token, with 5% of the supply, or 500,000 TORN tokens, airdropped to early adopters of the ETH pools.

The price for TORN tokens quickly climbed from $214.29 on 9 February 2021 to $425.03 on 21 February, but then sold off and dropped to $26.13 on 20 July when cryptocurrency markets bottomed out. The price moved up during the summer rally to $95.06 on 27 August, but fell back again to end the year at $36.21. TORN spiked to $51.10 on 17 February, its highest level since early December. 

TORN all-time performance chart

On 9 February, a proposal for a decentralised relayer network that could increase token demand, volumes and annual percentage yield (APY) was submitted. A vote held between 14-19 February adopted the proposal. 

The TORN price fell to a low of $33.72 on 20 February, moved up to $45.45 on 21 February, but dropped to $28.04 on 24 February as cryptocurrencies sold off heavily in a risk-off financial environment as Russia invaded Ukraine.

The TORN price spiked to $67.69 on 3 March, but fell to a low of $38.32 on 11 April. The price climbed to $57.63 on 6 May, but then fell to $33.79 on 12 May as cryptocurrency markets sold off with the collapse of the Terra Luna crypto ecosystem.

The price fell further to $15.72 on 14 June, but then began to trend higher until 7 August, trading up to $31.50. TORN plunged by as much as 33% on 8 August in response to the US Treasury’s blacklisting, with the token trading down to $21.01. The token has since given up another 24%, trading down to $15.95 on 11 August.

What is the outlook for the TORN price prediction in light of its suspension in the US? Let’s look at some of the latest forecasts.

Tornado Сash price prediction: Where will TORN trade in 2022, 2025 and 2030?

Technical analysis from CoinCodex showed that indicators were firmly bearish on the short-term outlook for the TORN price, with 24 showing sell signals at the time of writing on 12 August compared with five buy signals. But CoinCodex’s Tornado Cash price prediction estimated that the token’s value could rebound by 22.12% to $20.29 by 17 August and rise to $22.84 in a month.

Online forecasting site Wallet Investor’s Tornado Cash price prediction for 2022 indicated that the token could end the year at $19.404 and drop to $7.575 by the end of 2023. The price could then turn higher to $12.375 by the end of 2024. Wallet Investor’s Tornado Cash price prediction for 2025 projected that the token could trade at $14.731 by the end of the year and $19.71 by August 2027.

By contrast, DigitalCoinPrice’s TORN coin price prediction was bullish for the long term, climbing from an average of $21.57 in 2022 and $23.83 in 2023 to $31.78 in 2025 and $75.12 by 2030, based on historical data.

Price Prediction’s Tornado Cash price prediction for 2030 expected a faster acceleration in price gains over the next few years, rallying from an average of $34.95 in 2022 to $105.11 by 2025 and soaring to $660.97 by the end of the decade, based on the site’s deep artificial intelligence-assisted technical analysis.

When looking at any TORN crypto price prediction, it’s important to keep in mind that cryptocurrency markets remain extremely volatile, making it difficult to accurately predict what a coin’s price will be in a few hours, and even harder to give long-term estimates. As such, analysts and algorithm-based forecasters can and do get their predictions wrong.

If you are considering investing in cryptocurrency tokens, we recommend that you always do your own research. Look at the latest market trends, news, technical and fundamental analysis and expert opinion before making any investment decision. Keep in mind that past performance is no guarantee of future returns.

FAQs

Is tornado cash a good investment?

In volatile cryptocurrency markets, it’s important to do your own research on a coin or token to determine if it is a good fit for your investment portfolio. Whether the TORN token is a suitable investment for you depends on your risk tolerance and how much you intend to invest, among other factors.

Will the tornado cash price go up or down?

At the time of writing (12 August), some of the forecast sites were mixed in their tornado token price forecasts. Wallet Investor expected the price to fall by the end of 2023. Price Prediction and DigitalCoinPrice expected the price to make strong gains. However, the US Treasury’s sanctions could weigh on the TORN token value. You should do your own research to form your own view as to whether the price will rise or fall in the future. And never trade money you cannot afford to lose.

Is tornado cash secure?

As stated on the project’s website: “Tornado.cash was audited. However, it is still an experimental software. Please use at your own risk.” Always make sure to do your own research.

Should I invest in tornado cash?

Whether tornado cryptocurrency is a suitable investment for you depends on your personal financial circumstances, asset diversification and risk appetite. Cryptocurrencies are highly volatile assets, making them riskier than other forms of investment. You should evaluate the level of risk you are prepared to accept before investing. And never invest what you cannot afford to lose.

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