The U.S. Treasury has a system that allows users to hide details of transactions. cryptocurrency announced that it would impose sanctions on Tornado Cash, its mixing service.
DeFi Cryptocurrency Mixing Service Tornado Cash Added to US Sanctioned Institutions List
The regulator added Tornado Cash and 44 associated Ethereum and USDC wallets to its Specially Designated Citizens (SDN) list, according to the Treasury Foreign Asset Control Office (OFAC) announcement on Aug. The wallets mentioned include the smart contract running Tornado Cash, the Gitcoin grands address, and the Tornado Cash donation wallet.
The Specially Designated Citizens list prevents US individuals and companies wishing to operate in the US from financially interacting with designated entities. In May OFAC added Blender.io, its first specification for a crypto mixing service, to the list.
However, Tornado Cash differs from Blender.io in being a decentralized protocol. This could be the first instance of a US sanction targeting a DeFi operator.
Despite banning SDN-specified crypto wallets from its front-end in April, Tornado Cash’s involvement with high-profile hacks like Ronin and Harmony continued to draw the attention of the Treasury.
The use of this platform by the North Korean hacker group Lazarus caused a particular reaction from the Treasury. The platform was accused of laundering $455 million for Lazarus.
Brian Nelson, Treasury’s undersecretary for terrorism and financial intelligence, said:
“Despite public assurances to the contrary, Tornado Cash has repeatedly failed to take fundamental steps to address risks in preventing money laundering for malicious cybercriminals.”
*Not investment advice.
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