The US Treasury prohibited virtual currency mixer Tornado Cash on Monday for allegedly assisting hackers, particularly those from North Korea, in laundering funds from cybercrime.
Tornado Cash, a sort of anonymizing virtual currency exchange designed to protect the anonymity of blockchain users, has laundered more than $7 billion in virtual currency since its inception in 2019. The official also stated that the Lazarus Group, a well-known North Korean government-backed hacker group that has undertaken several data breaches, had laundered at least $455 million using Tornado Cash.
Tornado Cash was most recently linked to a $100 million attack on virtual currency startup Harmony in June, as well as an $8 million breach at Nomad.
The move by Treasury is the latest in a string of crackdowns against Tornado Cash and other crypto mixers like Blender.io, which help to obscure crypto transactions by pooling funds and then dispersing them to contributors. In a statement, Brian E. Nelson, Treasury Undersecretary for Terrorism and Financial Intelligence, stated that the mixer had not taken the required precautions to prevent its services from being exploited by some of the most prolific cyber criminals. He continued,
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, based on a US Treasury official, are an automated money-laundering tool that facilitates anonymous transactions by mixing assets from several sources before transferring them to their eventual destination. Tornado Cash is the Treasury Department’s second mixer service to be sanctioned, following sanctions against Blender.io in May, which was also reportedly used by North Korean hackers to launder cyber proceeds. According to the source, Blender.io looks to be no longer operational following the imposing of sanctions.
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