The protocol was at the center of some recent hacks and exploits in decentralized finance, including the alleged theft of $455 million by the North Korea-affiliated Lazarus Group.
The United States Treasury Department has added more than 40 cryptocurrency addresses allegedly connected to controversial mixer Tornado Cash to the Specially Designated Nationals list of the Office of Foreign Asset Control, or OFAC.
In a Monday announcement, OFAC effectively barred U.S. residents from using Tornado Cash and placed 44 USD Coin (USDC) and Ether (ETH) addresses connected to the mixer on its list of Specially Designated Nationals. The department alleged that individuals and groups had used the mixer to launder more than $7 billion worth of crypto since 2019, including the $455 million stolen by the North Korea-affiliated Lazarus Group. The protocol was also at the center of some recent hacks and exploits in decentralized finance, including a $375-million attack on Wormhole in February and a $100-million hack on Horizon Bridge in June.
“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 and without basic measures to address its risks,” said Brian Nelson, Under Secretary of the Treasury for Terrorism and Financial Intelligence. “Treasury will continue to aggressively pursue actions against mixers that launder virtual currency for criminals and those who assist them.”
Today, Treasury sanctioned virtual currency mixer Tornado Cash, which has been used to launder more than $7 billion worth of virtual currency since its creation in 2019. Virtual currency mixers that assist criminals are a threat to U.S. national security. https://t.co/x8sCXsNzUv
— Treasury Department (@USTreasury) August 8, 2022
In a tweet on Monday, Secretary of State Antony Blinken falsely claimed Tornado Cash was a “U.S.-sanctioned, DPRK state-sponsored hacking group, used by the DPRK to launder money.” He later deleted the post and tweeted the crypto mixer “has been used to launder money for a U.S.-sanctioned DPRK state-sponsored cyber hacking group.”
We’ll continue to aggressively pursue actions against currency mixers laundering virtual currency for criminals. Today, @USTreasury sanctioned virtual currency mixer Tornado Cash, which has been used to launder money for a U.S.-sanctioned DPRK state-sponsored cyber hacking group.
— Secretary Antony Blinken (@SecBlinken) August 8, 2022
The Treasury Department took similar steps against cryptocurrency mixer Blender.io in May. According to OFAC, the mixer allegedly processed $20.5 million out of approximately $620 million stolen from the play-to-earn game Axie Infinity’s Ronin Bridge — roughly 173,600 ETH and 25.5 million USDC. Under OFAC sanctions, firms and individuals have their assets blocked and “U.S. persons are generally prohibited from dealing with them.”
Related: US Treasury Dept sanctions 3 Ethereum addresses allegedly linked to North Korea
Tornado Cash announced in July that it had fully open-sourced its user interface code as part of its goals toward complete decentralization and transparency. The mixer’s website included a compliance tool that allowed users to show the source of any transaction.