The US Treasury Department imposed sanctions on Tornado Cash, a crypto mixer platform, accusing it of laundering billions of dollars in virtual currency. Crypto mixers are platforms used to cover fund trails. They do this by blending a user’s tokens with a pool of other users’ assets on the platform. Such platforms go beyond traditional crypto platforms when it comes to concealing the identities of those involved in transactions.
On 8 August, the Department’s Office of Foreign Assets Control (OFAC), a watchdog agency tasked with preventing sanctions violations, added Tornado Cash to its Specially Designated Nationals list—a running tally of blacklisted people, entities, and crypto addresses. With this move, the Department has banned the use of Tornado Cash and added 44 USD Coin (USDC) and Ether (ETH) addresses linked to the mixer to its list of Specially Designated Nationals.
According to the department, the mixer was used to launder more than $7 billion in crypto since 2019, including the $455 million stolen by the North Korean-linked Lazarus Group. The protocol was also at the heart of some recent decentralized finance hacks and exploits, including a $375 million attack on Wormhole in February and a $100 million hack on Horizon Bridge in June.
Tornado Cash’s actions follow sanctions imposed on another popular service, Blender.io, in May 2022. Blender.io allegedly handled funds for Russian ransomware attacks.
