Tornado Cash Token Spirals as Binance Delists Controversial Privacy Coin

The embattled privacy coin TORN, governance token for the Tornado Cash mixing protocol, lost over half its value following crypto exchange Binance’s November 26th announcement that it will delist the asset.

TORN plunged from $3.90 to $1.66, a 57% single-day wipeout, as traders reacted to news that the world’s largest exchange will cease TORN deposits on December 8 and end withdrawals next March.

Keypoints

• Tornado Cash token TORN fell 57% after Binance announced it will delist the coin
• Binance to stop TORN deposits on Dec 8 and withdrawals on March 7, 2024
• Tornado Cash is a crypto mixing protocol sanctioned by US for alleged money laundering
• Binance claims it delisted TORN because it no longer meets listing standards
• Drop coincided with Binance’s admission it served some US customers without license

Tornado Cash provides transaction mixing services to obscure the flow of funds on the blockchain, promising anonymity prized by privacy proponents but decried by regulators as enabling crime. This summer, the U.S. Treasury sanctioned Tornado Cash for allegedly facilitating money laundering by North Korean state hackers and other cybercriminals. Americans were legally prohibited from using Tornado Cash, but the protocol itself remained functional.

That is, until last week when U.S. authorities criminally charged Tornado Cash’s founders with conspiracy to launder money. The fresh indictments ramped up pressure on crypto intermediaries maintaining ties to Tornado Cash to cut those links entirely.

Enter Binance, which earned its dominance via a jurisdiction-hopping strategy keeping regulators at bay. Binance claimed it banned U.S. customers while offering crypto trading services globally. But as part of November’s bombshell settlement with the Justice Department, in which Binance paid $4.3 billion in fines related to alleged anti-money laundering violations, the exchange admitted it did business with some U.S. users without proper registration.

Having pledged to come into U.S. authorities’ compliance, Binance now faces immense pressure to delist not just TORN but other tokens that attract regulatory glare. Sure enough, in simultaneously announcing the removal of TORN and three other coins, Binance indicated that exchange reviews sometimes end with delisting assets that no longer meet “high level of standard we expect.”

For Tornado Cash believers advocating the virtue of transactional privacy, Binance delisting TORN seems a blow betraying cypherpunk principles. Yet for lawyerly crypto companies striving for mainstream legitimacy, Binance’s detachment from Tornado Cash may signal maturation of an industry long critiqued as a haven for criminality. Either way, Tornado Cash token holders have much less to show for their beliefs inanonymity as TORN now trades at nearly 60% discounts on leading exchanges.