US Treasury Blacklists Crypto Mixer Tornado Cash

US Treasury Blacklists Crypto Mixer Tornado Cash

The Treasury Department on Monday announced sanctions on Crypto mixing services Tornado Cash. On Monday, the Office of Foreign Assets Control (OFAC), a watchdog body responsible for avoiding sanctions violations, added TORN to its Specially Designated Nationals list, a rolling record of banned persons, businesses, and cryptocurrency addresses. 

As a result, no one in the US can engage with Tornado Cash or any of the Ethereum wallet addresses associated with the protocol. Those who do so may face criminal charges. According to the Treasury Department, TORN  was a crucial tool for the Lazarus Outfit. It is a North Korean hacker group linked to the $625 million March attack on Axie Infinity’s Ronin Network. 

The blockchain research says tens of millions of dollars in Crypto stolen from Ronin went through TORN. OFAC previously sanctioned, another mixing service accused of laundering earnings from ransomware attacks. 

According to a senior department officer, “Tornado Cash has been the go-to mixer for cybercriminals looking to launder the proceeds of crime. It has also helped hackers, including those currently under US sanctions. The crypto launders the proceeds of their cybercrimes by concealing the origin and transfer of this illicit virtual currency.” Since its inception in 2019, Tornado Cash is said to have laundered more than $7 billion in virtual money.

According to Ari Redbord, head of legal and government affairs at analytics firm TRM Labs, the move marks the Treasury Department’s “biggest, most influential step” in cryptocurrency to date. Meanwhile, on-chain data analysis says Ronin hackers have frequently laundered Ronin gains using Tornado Cash.

According to Nansen, the average amount of ETH deposited on Tornado Cash surpassed 220,000 in May and June 2022. This amount was valued at $220 billion to $660 billion throughout that time period.

According to blockchain research from organisations such as Elliptic, proceeds from previous hacks have also passed through Tornado Cash. Earlier this year, over 4,600 ETH stolen from the crypto-exchange was laundered using the mixing service.

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