US Slaps Sanction on Crypto Mixer Tornado Cash

Tornado Cash is the latest crypto mixer to join the US Department of Treasury’s list of sanctioned organizations. The Department shared the news in a press release on Monday alongside other details of the sanction. In its release, the US Treasury highlighted Tornado Cash’s role in several stolen crypto launders as its primary reason for the sanction.

Tornado Cash and Cybercrime

Tornado Cash is the second service platform to have received a sanction from the Treasury’s Office of Foreign Assets Control (OFAC). Reportedly, since its 2019 inception, bad actors have employed the privacy protocol to launder over $7B worth of crypto assets. 

The OFAC release took care to point out a few examples from the past few years. State-backed hackers from the Democratic People’s of Korea, the Lazarus Group made the top of the list. The infamous hackers made off with over $455M from the high-profile Ronin Hack using Tornado Cash. This remains the largest known breach in crypto history to date. 

In the release, the Department of Treasury also brought up the more recent Harmony Bridge attack. The culprits looted $96 million on June 24 and were able to cart off the funds with Tornado Cash. Additionally, the crypto mixer processed about $7.8M over last week’s Nomad heist.

Tornado Cash Fails to Act Against Malicious Actors

Under Secretary of the Treasury for Terrorism and Financial Intelligence, Brian E. Nelson spoke on the sanction. He explained that despite promises to do so, Tornado Cash has not devised any controls addressing the issue at hand. The privacy platform has repeatedly failed to take steps to prevent bad actors from taking advantage of its services, said Nelson. According to the release, the Treasury has reached out to the platform in the past. However, their efforts have reportedly yielded no results. 

What does the sanction mean?

Following the sanction, US residents will no longer be able to use Tornado Cash’s services, at least legally.  Also, the OFAC has blocked all US assets on the platform and also called for citizens to report them.

Treasury to Keep Acting Against Mixers that Launder Funds

As stated earlier, Tornado Cash is the second platform to join the Treasury’s blacklist. In May this year, the department of Treasury imposed a sanction on a mixer for the first time.  The platform in question was Blender.io, which the Treasury also claimed has ties to the Lazarus hackers.  

The US already sanctioned the Lazarus Hackers in 2019, however, and mixers in general. In their release, the department brought up the financial risks of such platforms. According to them, while mixers claim to increase privacy, illicit actors mostly use them to launder funds. 

Virtual currency mixers that assist criminals are a threat to U.S. national security. Treasury will continue to investigate the use of mixers for illicit purposes and use its authorities to respond to illicit financing risks in the virtual currency ecosystem.”

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As Nelson noted, the Treasury plans to continue to “aggressively” chase down mixers that launder assets for criminals.

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