US Treasury bans Tornado Cash mixer for role in crypto money laundering

1 month ago 22

The US Department of the Treasury has added the Tornado Cash crypto mixer to a database of sanctioned organizations, barring each US citizens from interacting with it and requiring that US assets belonging to Tornado Cash beryllium reported to the Office of Foreign Assets Control.

The announcement was made connected Monday morning by the Treasury successful a property merchandise that cited Tornado Cash’s relation successful laundering cryptocurrency stolen successful large hacks, particularly those linked to North Korean hacking groups. In March, $625 cardinal was stolen from the blockchain down the Axie Infinity crypto crippled and laundered done Tornado Cash — a heist that the FBI has attributed to the North Korea-based Lazarus Group.

The melodramatic determination from the Treasury is the latest escalation successful a bid of enforcement actions against Tornado Cash and different crypto mixers, which assistance to obfuscate cryptocurrency transactions by pooling funds unneurotic and past redistributing them to contributors. In a statement, Brian E. Nelson, nether caput of the Treasury for coercion and fiscal intelligence, said that the mixer had not taken capable steps to forestall its services from being utilized by immoderate of the astir prolific cybercriminals.

“Today, Treasury is sanctioning Tornado Cash, a virtual currency mixer that launders the proceeds of cybercrimes, including those committed against victims successful the United States,” Nelson said. “Despite nationalist assurances otherwise, Tornado Cash has repeatedly failed to enforce effectual controls designed to halt it from laundering funds for malicious cyber actors connected a regular ground and without basal measures to code its risks.”

“Treasury volition proceed to aggressively prosecute actions against mixers that launder virtual currency for criminals and those who assistance them,” Nelson said.

Tornado Cash is present the 2nd cryptocurrency mixer to find itself efficaciously chopped disconnected from the US fiscal system. In May, the Treasury added Blender.io to its sanctions list, besides citing Blender’s usage by North Korean hacking groups arsenic good arsenic planetary ransomware gangs similar Conti and Trickbot.

Though determination are morganatic privacy-focused uses of cryptocurrency mixers, tools similar Tornado Cash and Blender undoubtedly play a cardinal relation successful helping organized transgression gangs launder the proceeds of transgression successful a mode that cannot beryllium traced by modular blockchain tracking techniques. In January 2022, blockchain investigation steadfast Chainalysis reported that the usage of crypto mixers had reached an all-time high, with year-on-year increases driven mostly by input transactions coming from wallet addresses linked to cybercrime.

In a imaginable effort to evade regulation, Tornado Cash was acceptable up arsenic a decentralized concern product, meaning that the bundle codification that runs the work is distributed crossed the Ethereum web alternatively than moving connected servers based successful 1 peculiar country. However, the Treasury’s sanctions database introduction for Tornado Cash targets the mixer by specifying a fig of Ethereum addresses linked to it, forbidding US entities of immoderate benignant from transacting with these addresses.

While the sanctions against Tornado Cash are a terrible reprimand from the Treasury Department, the accompanying property merchandise seems to permission the doorway unfastened for a alteration successful argumentation should the mixer run successful person compliance with guidance fixed by regulators.

“The eventual extremity of sanctions is not to punish, but to bring astir a affirmative alteration successful behavior,” the connection ends.

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