The Resurgence of Crypto Mixing: Criminals Adapt Quicker Than Regulations

In 2022, U.S. regulators attempted to eliminate crypto mixing tools like Tornado Cash, aiming to combat illicit activities. However, recent data reveals that this crackdown didn’t deter criminals as intended. Instead, regular users seeking financial privacy were significantly affected. The Cambridge Centre for Alternative Finance (CCAF) has identified a resurgence in crypto mixing, led by platforms like Railgun, which now dominates the market.

Key Takeaways

Following the crackdown on Tornado Cash, crypto mixing usage has rebounded to pre-ban levels.
Railgun has become the leading protocol, handling 71% of crypto mixer transactions, while Tornado Cash represents 25%.
The sanctions primarily pushed away legitimate users rather than criminals, leading them to alternative platforms.
A substantial increase in funding from unlabeled wallet addresses indicates a shift toward anonymity in user behavior.

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The Rise Of Railgun In A Recovering Market

Recent research by the CCAF shows a notable increase in crypto mixer usage, with total transactions reaching around 32,000 in 2025, up from 21,000 in 2024 and 16,000 in 2023.

Crypto Mixer Usage
Source: Cambridge Centre for Alternative Finance

This growth follows the U.S. Treasury's decision to lift sanctions against Tornado Cash on March 21, 2025. Railgun, now processing 71% of all mixer transaction volume, screens deposits against flagged address lists. In comparison, Tornado Cash makes up roughly 25% of transactions in 2025 and Privacy Pools accounts for the remaining 5%.

While Railgun and Privacy Pools strive to exclude known bad actors before funds enter their systems, CCAF reports there remains a gap in updating blacklists. This lag allows freshly flagged addresses a temporary window to process funds unimpeded.

Crypto Transaction Volume
Source: Cambridge Centre for Alternative Finance

The Impact of Sanctions on User Behavior

The crackdown in 2022 led to a swift decline in Tornado Cash's daily transactions, which plummeted by 97% in days, while overall mixer volume dropped by 45%. However, the impact was uneven across the user spectrum.

“Our research indicates that sanctions primarily deterred compliant users, while illicit actors swiftly adapted,” explained Wu to researchers. Many shifted to other platforms, including cross-chain bridges and decentralized exchanges.

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A look at deposit patterns reinforces this viewpoint. Centralized exchanges, which require user identification, significantly cut off mixer funding after the ban. By 2025, 95% of all crypto mixer funding originated from unlabeled wallet addresses—up from 76% in 2020.

Before the sanctions, most mixer activity took place more than 24 hours post wallet creation. That trend has reversed, with quicker transactions indicating users’ attempts to avoid identification.

Interestingly, a 2023 report from the Federal Reserve Bank of St. Louis highlighted that only about 30% of Tornado Cash traffic could be traced back to illegitimate sources, illustrating that privacy tools also cater to lawful purposes. The demand for these tools, from both users aiming for privacy and those with illicit intentions, continues unabated.

Featured image from Unsplash, chart from TradingView