Feb 28, 2026
1 0
BEARISH 📉 : US Crypto Sanctions Deter Legitimate Users, Not Criminals
In 2022, US regulators attempted to curb illegal activities by targeting Tornado Cash. However, this approach mainly affected ordinary users seeking privacy, as new research from the Cambridge Centre for Alternative Finance (CCAF) indicates that coin mixer usage has rebounded to near pre-ban levels.
Rebound in Mixer Usage
- Crypto mixer transactions reached approximately 32,000 in 2025, up from 21,000 in 2024 and 16,000 in 2023.
- The US Treasury lifted sanctions on Tornado Cash in March 2025, contributing to increased usage.
Market Dominance of Railgun
- Railgun processes 71% of all mixer transaction volume, while Tornado Cash handles 25% and Privacy Pools 5%.
- Both Railgun and Privacy Pools attempt to exclude bad actors, but blacklists are updated only after new exploits are known.
Impact of Sanctions
- Initial crackdown reduced Tornado Cash's daily transactions by 97%, with overall mixer market volume dropping 45%.
- Sanctions deterred compliant users more than criminals, who switched to alternative platforms and decentralized exchanges.
- By 2025, 95% of mixer funding was from unlabeled wallets, up from 76% in 2020.
Most mixer transactions now occur within 24 hours, reflecting users' attempts to avoid identification. Despite regulatory actions, a Federal Reserve Bank of St. Louis paper found that only around 30% of Tornado Cash traffic could be linked to illicit sources, indicating ongoing legitimate demand for privacy tools.