Tornado Cash: US Treasury Sanctions Crypto Mixers

According to the US Treasury Department, crypto mixing service Tornado Cash has laundered more than $7 billion worth of cryptocurrencies.

US Treasury Department added crypto mixer Tornado Cash to a list of sanctioned services. This means that all US citizens are now prohibited from interacting with the mixer. Tornado Cash’s US assets are also to be reported to the Office of Foreign Assets Control. This was reported by CNBC, among others.

The US Treasury Department blacklisted crypto mixer Tornado Cash on Monday. It announced that the system would be “since its inception in 2019 to launder virtual currencies in the Valued at more than $7 billion.” The platform would now have been added to the list of Specially Designated Nationals and Blocked Persons (SDN) that conducts all Tornado Cash transactions Persons in the United States prohibits “unless authorized by a general or specific license granted by OFAC issued”.

Mixer service Tornado Cash covered the tracks

The laundered funds also included funds stolen by hackers from North Korea’s Lazarus Group, according to the FBI, in the largest known crypto heist to date. The hackers stole millions of dollars from the sidechain network Ronin behind the play-to-earn game in March this year 357 NFT crypto game Axie Infinity.

At the time, blockchain analysis firm Chainalysis concluded that Tornado Cash played a role in money laundering in this regard. The mixer service aims to cover the trail of funds by mixing streams of potentially identifiable crypto transactions with others. According to Elliptic, the hackers sent ETH worth more than 80 million dollars via the crypto mixer at the time .

In a statement, Brian E. Nelson, Undersecretary of the Treasury Department for Terrorism and Financial Intelligence, publicly disclosed that Tornado Cash had failed to take adequate steps to prevent its services from using some of the most prolific cybercriminals.

“Today, the Treasury Department is sanctioning Tornado Cash, a virtual currency mixer that laundering the proceeds of cybercrime, including those committed against victims in the United States. Despite other public assurances, the crypto-mixer has repeatedly failed to enforce effective controls designed to deter it from laundering funds for malicious cyber actors on a regular basis and without basic measures to manage its risks. The Treasury Department will continue to aggressively crack down on mixers who launder virtual currencies for criminals and those who help them.”

With this measure, Tornado Cash is now the second cryptocurrency mixer to be effectively cut off from the US financial system. In May of this year, the USA imposed sanctions on the blender service

tornado cash

The recent Treasury Department action drew massive criticism from within the crypto world because it affects every US person using the crypto mixer, not just those involved in money laundering or other crimes.

Vitalik Buterin, the co-founder of Ethereum, tweeted that he used Tornado Cash to donate to Ukraine. His intention was to protect the recipients’ financial privacy. The Russian government should not receive all the details of the transaction.

Deletion of the open source code on GitHub

The Tornado Cash open source code also apparently disappeared from GitHub shortly after the Treasury Department’s announcement. Roman Semenov, co-founder of Crypto Mixer, tweeted: “@GitHub just suspended my account. Is writing an open source code illegal now?”.

At the request of Ars Technika, GitHub, owned by Microsoft, stated:

“Trade laws require GitHub to restrict users and customers identified as Specially Designated Nationals (SDNs) or other denied or blocked parties, or using GitHub on behalf of blocked parties. At the same time, however, GitHub’s vision is to be the global platform for developer collaboration. We thoroughly review government sanctions to ensure users and customers are not impacted beyond what is required by law.”

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