Crypto-mixer Tornado Cash has been blacklisted by the US Treasury Department for allegedly laundering more than $7 billion in crypto.
Tornado Cash: crypto-mixer blacklisted for money laundering
According to reports, it appears that the crypto-mixer service Tornado Cash has been sanctioned and blacklisted by the US Treasury Department for allegedly laundering more than $7 billion in crypto since 2019.
Specifically, the US Treasury Department’s Office of Foreign Assets Control (OFAC) alleged that Tornado Cash was used to steal $455 million from the Democratic People’s Republic of Korea’s (DPRK) state-sponsored hacker group called the Lazarus Group.
On top of that, there would be the use of the platform to launder another $96 million in funds from malicious cyber-actors stemming from the theft on 24 June 2022 from the Harmony Bridge and at least $7.8 million from the theft on 2 August 2022 from Nomad.
In this regard, Treasury Undersecretary for Terrorism and Financial Intelligence Brian E. Nelson said:
“Today, Treasury is sanctioning Tornado Cash, a virtual currency mixer that launders the proceeds of cybercrimes, including those committed against victims in the United States. Despite public assurances otherwise, Tornado Cash has repeatedly failed to impose effective controls designed to stop it from laundering funds for malicious cyber actors on a regular basis and without basic measures to address its risks. Treasury will continue to aggressively pursue actions against mixers that launder virtual currency for criminals and those who assist them”.
Tornado Cash and associated Ethereum wallet addresses
Tornado Cash is a virtual currency mixer that operates on the Ethereum blockchain and indiscriminately facilitates anonymous transactions by obfuscating their origin, destination, and counterparties.
So, while its purpose is to increase privacy, mixers like Tornado are also commonly used by illicit actors to launder funds, particularly those stolen during major robberies.
To this end, OFAC has added Tornado Cash and the associated Ethereum wallet addresses to its “Specially Designated Nationals list”. Thus, anyone interacting with these wallet addresses could now face criminal penalties, which is a cause for concern for some crypto owners with honest intentions.
One Twitter user described the big picture of the situation:
Today the US sanctioned Ethereum addresses associated w/ a privacy service called Tornado cash.
Circle immediately froze the USDC in those accounts. GitHub suspended contributors to Tornado.
If you were waiting for the opening shot of big brother’s assault on crypto this was it
— RYAN SΞAN ADAMS – rsa.eth 🦇🔊 (@RyanSAdams) August 8, 2022
“Today the US sanctioned Ethereum addresses associated w/ a privacy service called Tornado cash. Circle immediately froze the USDC in those accounts. GitHub suspended contributors to Tornado. If you were waiting for the opening shot of big brother’s assault on crypto this was it”.