The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) has recently imposed sanctions on virtual currency mixer Tornado Cash. This action was taken as a response to Tornado Cash being utilized for the laundering of more than $7 billion worth of virtual currency since its establishment in 2019.
Among the illicit activities facilitated by Tornado Cash, it was found to have been involved in laundering over $455 million stolen by the North Korean state-sponsored hacking group, Lazarus Group, which was previously sanctioned by the U.S. government in 2019. Furthermore, the virtual currency mixer was also implicated in laundering over $96 million of funds derived from the June 2022 Harmony Bridge Heist, as well as at least $7.8 million from the recent Nomad Heist.
In a press release, Under Secretary of the Treasury for Terrorism and Financial Intelligence Brian E. Nelson expressed concerns over Tornado Cash’s failure to implement effective controls to prevent the laundering of funds for malicious cyber actors. Despite public assurances to the contrary, the virtual currency mixer continued to facilitate money laundering for cybercriminals without addressing the risks associated with its operations.
As a result of the sanctions, all property and interests belonging to Tornado Cash within the U.S. or under the control of U.S. individuals are to be blocked and reported to OFAC. The Treasury’s Office emphasized the potential misuse of virtual currency for illicit activities, including sanctions evasion, through various platforms such as mixers, peer-to-peer exchangers, darknet markets, and exchanges.
OFAC highlighted the role of virtual currency in enabling heists, ransomware schemes, fraud, and other cybercrime-related activities. Nelson reiterated the Treasury’s commitment to taking firm actions against mixers that facilitate the laundering of virtual currency for criminals and their accomplices.
This development follows OFAC’s previous enforcement actions against cryptocurrency mixing services, such as Blender.io, which was fined for laundering over $20.5 million of the estimated $620 million stolen from the Ronin Network in March. The Treasury’s continued vigilance underscores the importance of combating illicit financial activities in the virtual currency space.