- The cryptocurrency industry is becoming more anonymous with the rise of coin mixer companies like CoinJoin, enabling users to mask their transaction history on the blockchain.
- Recently, Ethereum’s top mixer announced developments on its platform to create a “completely trustless and unstoppable” mixer.
Tornado Cash Completes its Biggest Trusted Setup Ceremony
Ethereum’s top coin mixer, Tornado Cash, announced the completion of its “trusted setup ceremony.” A cryptographic process in its latest version, and further modified its smart contract to create a perpetual self-executing code.
According to the official announcement on Medium, the ceremony, completed on May 10 represented the largest ceremony yet in attendance.
The published post reads:
“We are happy to announce that our trusted setup ceremony is now complete. With a record 1114 contributions, this was by far the largest Trusted Setup Ceremony to date.”
Previous all-time high attendance in the conference was around 200 participants, which shows the ballooning growth in privacy-focused platforms.
The platform will now employ a cryptographic method known as multi-party computation (MPC), enabling secure key management by sharing fragments of the key on multiple computers. This ensures that at no point is a single, vulnerable computer responsible for an actual key.
Despite Tornado Cash’s new version launching with MPC security functionalities and the self-executing code, some analysts remain wary on the platform offering total anonymity.
Privacy Concerns on Coin Mixers
One of the biggest challenges that coin mixers face in masking transactions is the lack of a deep “anonymity set”. The more cryptocurrency brought into its ecosystem – the better.
With a larger number of transactions coming into the platform, the more secure the mixer will be. Mixers rely on several transactions to better obfuscate those coming in and going out of the platform.
Crypto Data Company, Chainalysis’ Maddie Kennedy said there are concerns on the level of security these mixers provide as the company still finds loopholes to track users’ transactions. He said:
“While mixers, CoinJoins, and solutions like Tornado Cash can make tracing funds more difficult, Chainalysis can often still follow funds through them.”
Moreover, Gavin Andresen, Bitcoin Core’s early developer, argues that coin mixers are still leaving room for user transactions to be traced, given the complexity of using the platforms privately. He echoed Kennedy’s point adding:
“It is really hard for mere mortals to use something like Tornado (or CoinJoin or other similar technologies) in a way that doesn’t leak information about their wallet.”
The Regulation Dilemma
Finally, coin mixers face a regulation dilemma as countries focus on these platforms as money transmitters.
So, what is the issue with this? Well, money transmitters are regulated by the government and therefore have “obligations” set by the Bank Secrecy Act (BSA). This law requires strict adherence to KYC/AML, which beats the purpose of the mixers.
In a bid to be on the right side of regulation, Tornado Cash v2 will include a cryptographic note that will allow exchanges, authorities, and governments to trace the transaction history if the holder provides it.
However, regulation is not something that Tornado’s Storm and co-founder Roman Semenov fear as Storm explained that the self-executing code does not implicate the developers.