Tornado Cash

Definition ∞ Tornado Cash is a decentralized cryptocurrency mixing service designed to enhance user privacy by obscuring the transaction history of digital assets. It operates by pooling user funds and then redistributing them, making it difficult to trace the origin and destination of specific transactions. This anonymity feature has made it a subject of significant regulatory scrutiny. The service functions as a privacy-preserving tool for blockchain interactions.
Context ∞ Tornado Cash has become a focal point in discussions surrounding cryptocurrency privacy, regulatory compliance, and illicit finance. News coverage frequently details its use by malicious actors, leading to sanctions and legal actions against the protocol and its developers. The ongoing debate centers on balancing the right to privacy with the imperative to prevent illicit activities, shaping future regulatory approaches to privacy-enhancing technologies.