Monday, the Treasury of the United States blacklisted tornado in cash to allegedly help launder approximately $7 billion in cryptocurrencies.
The US Treasury hasdigital currency mixing service Tornado Cash for its complicity in a crypto laundering case. According to the Federal Ministry of Finance, tornado money has laundered over $7 billion in cryptocurrency since it was created in 2019. Citing specific examples, the Treasury Department reported that the state-sponsored North Korean pirate group, the Lazarus group, laundered more than $455 million through tornado species. This unlawful conversion took place shortly after the group hacked the Bridge of Harmony in June. Another example is the hacking of the nomad bridge last week, where criminals allegedly used money from a tornado to launder at least $7.8 million of stolen funds.
Speaking on the development, Brian Nelson, undersecretary of the Treasury for Terrorism and Financial Intelligence, explained:
“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.”
Consequently, the US Treasury watchdog, the Office of Foreign Asset Control (OFAC), has banned citizens and companies from using Tornado Cash. Furthermore, Nelson also suggested that the department's final penalties for a blender would not be the last. As he put it:
“Treasury will continue to aggressively pursue actions against mixers that launder virtual currency for criminals and those who assist them.”
Tornado Cash, along with other blenders, including AlphaBay, makes it easy to conceal clients' crypto transactions in return for a royalty. This is achieved by combining potentially identifiable funds with others. The source of digital currencies and the shroud of their possible destination.
Involvement of the American Treasury penalty on Tornado Cash.
Following Monday's penalty, the Tornado Cash website and an extensive list of Ethereum addresses have been added to the Treasury Department's specially designated nationals list. Of these prohibited addresses, 44 are recipients of donations, one of which is registered as a Gitcoin beneficiary.
While the Treasury Department estimates that the total amount of tornado-laundered crypto assets is $7 billion, others do not. For example, according to a spokesman for the elliptical crypto analysis platform, this number is approaching $1.5 billion. The spokesman says the inflated amount is due to the total value of crypto assets – legitimate and illegitimate, channeled by tornado. According to the elliptical spokesman, the legitimate use of blenders is merely to preserve financial confidentiality.
Returning in April, Tornado Cash stated that it has deployed a blockchain tracker chain analysis tool to bar government-sanctioned portfolios. At the time, society stated in a statement that "the maintenance of financial privacy is vital to the preservation of our freedom, however, it should not come at the cost of non-compliance.”
However, this gesture by the crypto mixer does not seem to be good enough for US authorities.
The American Treasury penalty for tornado money comes after the department has taken similar measures against blender.io in May. By the looks of it, Blender.Io would have treated a small fraction of the 620 million dollars stolen on the Axie Infinity bridge.