US Department of Treasury Targets Another Crypto Mixer as Tornado.Cash Gets Sanctioned

The US Department of the Treasury’s Office of Foreign Assets Control (OFAC) has targeted another crypto mixer by sanctioning Tornado Cash.

Most recently, in May, OFAC sanctioned, a mixer that is said to be utilized by North Korea  for its “malicious cyber activities and money-laundering of stolen virtual currency.”

Tornado Cash is said to have laundered over $7 billion since its founding in 2019. Tornado is also said to be utilized by North Korea via its malignant Lazurus Group. Apparently, Lazurus used Tornado Cash to launch funds pilfered during the Harmony Bridge attack in June as well as the more recent Nomad theft.

The Under Secretary of the Treasury for Terrorism and Financial Intelligence Brian E. Nelson, issued the following statement on the new sanctions:

“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.”

Mixers as a business model will accept cryptocurrencies and then blend them with other cryptocurrencies to make it more difficult to trace the orgins of any transaction. As most crypto transfers are publicly viewable, and governments are getting better with enforcement tools, mixers can have a limited effect.

Last month, Chainalysis – a leader crypto data and investigative firm that provides services to public authorities, said mixing was at an all-time high. At that same time, the company said that it believes mixers may soon become obsolete as the tracking technology improves.

Tornado is being designated pursuant to E.O. 13694:

“for having materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of, a cyber-enabled activity originating from, or directed by persons located, in whole or in substantial part, outside the United States that is reasonably likely to result in, or has materially contributed to, a significant threat to the national security, foreign policy, or economic health or financial stability of the United States and that has the purpose or effect of causing a significant misappropriation of funds or economic resources, trade secrets, personal identifiers, or financial information for commercial or competitive advantage or private financial gain.”

Treasury said it would 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.

As a result of sanctions, all property and interests of Tornado Cash, that is in the United States or in the possession or control of U.S. persons, is blocked and must be reported to OFAC.  Additionally, any entities that are owned, directly or indirectly, 50 percent or more by one or more blocked persons are also blocked.

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