Tornado Cash: US Treasury Sanctions Cryptocurrency ‘Mixer’ Allegedly Used by North Korea to Launder Money

According to a senior Treasury official, 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 Korea state-sponsored hacking groups. It was also used last week to launder money from a Nomad’s “robbery”, an American cryptocurrency firm, the official said.

Monday’s sanctions will bar US persons, and those subject to 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 going.

Tornado Cash has made some efforts to meet its regulatory obligations, including adding a screening tool to prevent money from going to previously sanctioned cryptocurrency wallets, the senior Treasury official said. But despite that, the law enforcement analysis cryptocurrency The transactions showed that hackers like Lazarus Group could still send money to Tornado Cash for laundering, the official said.

As part of Monday’s action, the US government sanctioned 44 cryptocurrency wallets linked to Tornado Cash. The Treasury official said Tornado Cash had previously been identified as an entity of concern, but declined to say how long and where the organization may be based or what people may be operating.

“Despite public assurances to the contrary, Tornado Cash has repeatedly failed to impose effective controls designed to prevent it from laundering funds for malicious cyber actors on a regular basis and without basic measures to address its risks,” Under Secretary of the Treasury for Terrorism and Intelligence Financial. 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 the Treasury official, Tornado Cash is one of the largest virtual currency mixers the US government has identified. It is only the second time the Department has sanctioned such an entity.

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 money laundering of stolen virtual currency.”

The official said he hoped Monday’s sanctions would send a message to the private sector and partner countries to encourage them to develop regulations when it comes to virtual currency.