Updated: Sep 2, 2022
The virtual currency mixer Tornado Cash, which OFAC claims has been used to launder $7BN (€6.85BN) since its creation in 2019, will be subject to sanctions, according to a statement made today by the Office of Foreign Assets Control (OFAC) of the US Treasury Department.
According to a statement from OFAC, Tornado Cash uses the Ethereum blockchain to "indiscriminately" enable "anonymous transactions by obfuscating their origin, destination and counterparties with no attempt to determine their origin."
Despite being designed to "increase privacy," mixers like Tornado are "commonly used" by criminals to launder money, according to OFAC.
In the largest known virtual currency heist to date, Tornado Cash is accused of being used to launder more than $455 million (€440 million) that was stolen by the Lazarus Group, a North Korean state-sponsored hacking group that was sanctioned by the US in 2019.
The mixer was reportedly used to launder at least $7.8 million (€7.6 million) from the Nomad Heist earlier this month as well as more than $96 million (€94 million) of funds obtained by malicious cyber actors from the Harmony Bridge Heist.
According to a statement from Brian E. Nelson, Under Secretary of the Treasury for Terrorism and Financial Intelligence: "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 without basic measures to address its risks," he continued.
Under Sec. Nelson stated that the Treasury would "continue to aggressively pursue actions against mixers that launder virtual currency for criminals and those who assist them."
Although most virtual currency activity is legal, OFAC has issued a warning that it can be used for illegal purposes, such as "sanctions evasion through mixers, peer-to-peer exchanges, darknet markets and exchanges."
As a result of the action, all of Tornado Cash's property and interests in property that are located in the US or in the possession of US citizens must be reported to OFAC and blocked. All transactions involving any property or interests in property made by US citizens or within the US are also forbidden unless they have been approved by OFAC.
By fLEXI tEAM