U.S. Treasury sanctions cryptocurrency 'mixer' group over money laundering

The U.S. Treasury Department announced sanctions against the company Tornado Cash, which the government said is operating as a cryptocurrency “mixer” that facilitated money launderers, including those from a North Korean hacking group.

A cryptocurrency mixer, or tumbler, is basically a service where users basically pool their funds, mix them around, then redistribute them in amounts about equal to what they put in; though individual tokens can be tracked to specific wallets, the mixing process serves to obscure both where a token came from and where it was sent, thus frustrating efforts to monitor transactions.

The Treasury Department said that Tornado Cash, since it began operating in 2019, has laundered over $4 billion worth of cryptocurrency, including over $455 million stolen by the Lazarus Group, North Korean government-sponsored hacking group that is believed to have largest known virtual currency heist to date in March 2022. The company has also been linked to the June 24, 2022, Harmony Bridge Heist (for which Tornado Cash is said to have laundered $96 million) and the Aug. 2, 2022, Nomad Heist (Tornado Cash being used to launder about $7.8 million).

“Today, Treasury is sanctioning Tornado Cash, a virtual currency mixer that launders the proceeds of cybercrimes, including those committed against victims in the United States,” said Under Secretary of the Treasury for Terrorism and Financial Intelligence Brian Nelson in a statement. “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. Treasury will continue to aggressively pursue actions against mixers that launder virtual currency for criminals and those who assist them.”

The sanctions mean that all of Tornado Cash’s property and interests in the U.S. are blocked and must be reported to the Office of Foreign Assets Control. Further, any entities that are owned, directly or indirectly, 50% or more by one or more blocked persons are also blocked. All transactions by U.S. persons or within (or transiting) the United States that involve any property or interests in property of designated or otherwise blocked persons are prohibited unless authorized by a general or specific license issued by OFAC, or exempt. These prohibitions include the making of any contribution or provision of funds, goods, or services by, to, or for the benefit of any blocked person and the receipt of any contribution or provision of funds, goods, or services from any such person.

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