The United States has sanctioned virtual currency mixer, Tornado Cash. This is after claims of it has been used by Korean hackers to launder money since its creation emerged. The US Office of Foreign Assets Control (OFAC), on Monday, added Tornado Cash to the sanctions list. It is now illegal for US citizens to use Tornado Cash or any wallet addresses tied to it.
“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.”Brain Nelson – US Treasury Department Official
The cryptocurrency has been used to launder over $7 billion worth of virtual currency since its invention in 2019. The laundered money includes over $455 million looted by the Lazarus Group, a state-sponsored hacking group from Korea that was sanctioned in 2019.
According to the Treasury Department, blockchain analysis revealed that tens of millions of dollars worth of crypto stolen from Ronin flowed through Tornado Cash which hides the source of funds.
Mixers jumble cryptocurrencies from different people who secretly record how much a person wants to send to another then spit out the crypto randomly until the recipients receive the amounts.
The mixers act as black boxes that sever the tie between the account of the sender and recipient such that the source of the money is unknown. The recipient will receive the amount of let’s say ETH, but not the same ETH.
“Tornado Cash has been the go-to-mixer for cybercriminals looking to launder the proceeds of crime, as well as helping to enable hackers, including those currently under US sanctions, to launder the proceeds of their cybercrimes by covering up the origin and transfer of this illicit virtual currency,” said a senior official of the Treasury Department.
The Lazarus Group who are the masterminds behind the laundering were also linked to the $625 million March hack of Axie Infinity’s Ronin Network.
Vincent Munene is a freelance writer and a great blockchain enthusiast. Blockchain has changed his life in terms of financial freedom and in return, he likes to educate people and keep them up to date on everything blockchain. He is a Biochemist by profession and also loves to play the piano.