Crypto Mixing Is Back — And Criminals Adapted Faster Than The Rules Did

When US crypto regulators cracked down on Tornado Cash in 2022, the assumption was simple: shut down the tool, shut down the problem. It didn’t work out that way.

According to CCAF researchers Wenbin Wu and Keith Bear, total crypto mixer transactions reached approximately 32,000 in 2025 — a significant jump from roughly 21,000 in 2024 and 16,000 in 2023.

Both Railgun and Privacy Pools attempt to filter out known bad actors before crypto funds enter the system. But reports from CCAF note a meaningful gap — blacklists are updated only as new exploits are discovered, leaving a window where funds from freshly flagged addresses can still pass through.

The 2022 crackdown caused immediate disruption. Tornado Cash’s daily transactions collapsed by 97% within days. Across the broader mixer market, volume fell 45%. But the disruption was uneven.

Wu told researchers that sanctions “primarily deterred compliant users while illicit actors adapted” — first by migrating to alternative platforms, then to cross-chain bridges and decentralized exchanges altogether.

Deposit patterns tell the same story. Before 2022, centralized exchanges — which require identity verification — contributed meaningfully to mixer funding. After the ban, those deposits essentially vanished. By 2025, 95% of all crypto mixer funding came from unlabeled wallet addresses with no recorded entity ties, up from 76% in 2020.

Before the ban, most mixer activity occurred more than 24 hours after wallet creation. That pattern has flipped. Researchers say this faster behavior is “consistent with users seeking to avoid identification.”

Still, a 2023 Federal Reserve Bank of St. Louis paper found that only around 30% of Tornado Cash traffic could be linked to illegitimate sources — a reminder that privacy tools serve lawful purposes too. The demand, from both camps, never went away.

Featured image from Unsplash, chart from TradingView