Tornado Cash: US Treasury Sanctions Crypto ‘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 currencies since its launch in 2019, including $455 million from the Lazarus Group, North Korean State-sponsored hacking group. It was also recently used last week to launder money from a Bedouin “steal”, It is an American cryptocurrency company, the official said.

Monday’s sanctions will prevent US people, and those under US jurisdiction, from using the virtual currency mixer.

The virtual currency mixer receives a number of transactions and mixes them together before sending them to their final destination to make it difficult to trace where the money is coming from or where it is going.

A senior Treasury official said Tornado Cash has made some efforts to comply with its regulatory obligations, including by adding a screening tool to prevent funds from going to previously sanctioned cryptocurrency wallets. But despite this, law enforcement analysis of the public Cryptocurrency The official said the transactions showed that hackers like the Lazarus Group were still able to send money to Tornado Cash for laundering.

As part of Monday’s action, the US government imposed sanctions on 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 might be based or the individuals who might operate it.

“Despite public assurances to the contrary, Tornado Cash has repeatedly failed to enforce effective controls designed to prevent it from laundering money to malicious cyber actors on a regular basis and without taking basic measures to address their risks,” Treasury Under Secretary for Terrorism and Financial Intelligence Brian Nelson said in statement. “Treasury will continue to crack down on companies that launder the virtual currency of criminals and their aides.”

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According to a treasury official, Tornado Cash is one of the largest virtual currency synthesizers identified by the US government. This is only the second time that the ministry has imposed sanctions on such an entity.

In May, the Treasury sanctioned another virtual currency mixer, Blender.io, that it said North Korea used to “support its malicious cyber activities and money laundering of stolen virtual currency.”

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

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