On Monday, the US Treasury Department sanctioned Tornado Cash, a virtual currency mixer, for its use by cybercriminals, including those under US sanctions.
Tornado Cash has reportedly laundered more than $7 billion in virtual currency since its launch in 2019, including $455 million from the Lazarus Group, a North Korean state-sponsored hacking group, according to a senior Treasury official. It was also used last week to launder money from a “heist” on Nomad, an American cryptocurrency firm, the official said.
Monday’s sanctions will ban US persons and those under US jurisdiction from using the virtual currency mixer.
A virtual currency mixer receives a number of transactions and mixes them before sending them to their final destination to make it harder to track where the money is coming from or where it is going.
Tornado Cash did make some efforts to meet its regulatory obligations, including by adding a screening tool to prevent money from going into previously sanctioned cryptocurrency wallets, the senior Treasury official said. But even so, law enforcement analysis of public cryptocurrency transactions showed that hackers like the Lazarus Group could still send money to Tornado Cash for laundering, the official said.
As part of Monday’s action, 44 cryptocurrency wallets linked to Tornado Cash were sanctioned by the US government. The Treasury official said Tornado Cash had previously been identified as a subject of concern, but declined to say how long or where the organization may have been based or what individuals may be running it.
“Despite public assurances to the contrary, Tornado Cash has repeatedly failed to enforce effective controls designed to stop money laundering for malicious cyber actors on a regular basis and without basic measures to address the risks,” Treasury Undersecretary for Terrorism and Financial Intelligence Brian Nelson said in a statement. “Treasury will continue to aggressively pursue actions against mixers who launder virtual currency for criminals and those who assist them.”
According to a Treasury Department official, Tornado Cash is one of the largest virtual currency mixers identified by the US government. This is only the second time that the Ministry has imposed sanctions on such a company.
In May, the Treasury Department sanctioned another virtual currency mixer, Blender.io, which it said was used by North Korea “to support its malicious cyber activities and launder money from stolen virtual currency.”
The official said they hope Monday’s sanctions will send a message to the private sector and partner nations to encourage them to develop regulations when it comes to virtual currency.