US Authorities Impose Sanctions on Tornado Cash Cryptocurrency Mixer

The Office of Foreign Assets Control (OFAC), a division of the US Department of the Treasury, has imposed sanctions on the decentralized cryptocurrency mixer service Tornado Cash.

Authorities claim that, since its creation in 2019, more than $7 billion has been laundered through Tornado Cash. According to officials, the operators of the service failed or refused to implement “effective controls designed to prevent the regular laundering of funds by malicious actors.”

For example, it has been reported that North Korean hackers from the Lazarus Group actively used this mixer for their operations. Funds stolen in the Harmony hack (about $96 million), as well as funds obtained from the compromise of the Ronin blockchain, which is closely linked to the popular NFT game Axie Infinity (over $600 million stolen, with $455 million laundered through the mixer), and approximately $7.8 million from the recent Nomad bridge compromise all passed through Tornado Cash.

Additionally, the mixer was reportedly used by other criminals to make tracking stolen funds more difficult. This includes incidents such as the hacks of the Audius music blockchain platform, the Beanstalk DeFi platform, the decentralized exchange Uniswap, and the exit scam of Arbix Finance.

Consequences of the Sanctions

As a result of the sanctions, all property and interests in property of Tornado Cash (located in the US or in the possession or control of US persons) are now blocked and must be reported to OFAC. US citizens and others within the United States are now prohibited from conducting transactions with Tornado Cash without special permission from OFAC. Furthermore, any organizations that are directly or indirectly owned 50% or more by such persons will also be “banned.”

It is worth noting that earlier this year, US authorities imposed similar sanctions on the cryptocurrency mixer Blender.io, which was also allegedly used by North Korean hackers for money laundering.