US treasury Blacklists Crypto-Mixing service.
After multiple hacks and culprits using the platform to wash their stolen goods, Tornado Cash now has been blacklisted by the U.S. Treasury. The platform allows hackers to deposit funds into a “pool” of crypto with other users, users can then withdraw those funds to another address while concealing where the original funds came from. The platform has been tied to North Korean hackers and how they launder stolen crypto.
In the news today the U.S Treasury Department has banned all Americans from using the platform . The OFAC – Office of Foreign Assets which is an organization tasked with preventing violations on sanctions , announced Tornado Cash would be added to a Specially Designated Nationals list. This list is a complete continuing summation of businesses, entities, people and now cryptocurrency addresses that have been blacklisted. This means that all citizens of the United States are prohibited from interacting with said culprits.
Tornado cash being a part of that list means that all wallet addresses associated with them are blacklisted as well. Being on a blacklist means nobody can do business with them. Americans are prohibited from interacting with the platform. Any American caught using the platform could be facing real criminal charges and penalties.
Tornado Cash has been a very useful tool for the Lazarus group which is a North Korean cooperative group of hackers that is best known for the $625M hack on Axie infinity and its Ronin Network. According to research done by the Treasury department it was found that Tornado Cash was used to launder tens of millions of dollars worth of the stolen funds. Another blending source known as Blender.io was previously sanctioned by the governmental agency as it was alleged to have been used to launder funds from ransomware attacks and $20.5M in stolen assets from Ronin as well.
Tornado cash has been the king of platforms when it comes to laundering stolen funds in the crypto community. The platform has even been used to help those under U.S sanctions to launder their money and continue to circumvent those very sanctions.The platform was created back in 2019 and has allegedly helped to launder more than $7Bn worth of cryptocurrency.
Ari Redbord, the head of legal and government affairs TRM Labs, an analytics firm, spoke on the decision of the Treasury Department, calling it the “largest, most impactful action in crypto to date”. The hackers have continued to use Tornado Cash as a way to launder the stolen goods from the massive hack on Axie Infinity.Ethereum deposits on Tornado Cash jumped after Ronin was hacked. The amount of ETH in May was 220,000 which at the time equaled $220Bn to $660Bn in crypto during that time.
Recently Tornado Cash has seen a bit more than 167,400 ETH go through the platform, it would appear that 18% of that ETH was indeed more of the stolen ETH from Ronin. The hack on Ronin was not the only hack to have been convered using the Tornado Cash platform.
There were more hacks such as $15 million worth of crypto being stolen from Crypto.com, the $100 million hack of Harmony Bridge was also laundered through the platform and some proceeds from the $200 million hack of Nomad bridge were also sent through the platform as well.
The Department of Treasury and OFAC may consider platforms such as Tornado Cash and Blender.io to be a detriment to national security as these platforms can be used to help those put under sanctions get past those blockades. Countries such as Russia which is currently under heavy scrutiny and sanctions may still be able to carry on perfectly fine without recourse by using such platforms.
This money can be seen as not only being used to gain profit and fill pockets but also be used to proliferate weapons and build on projects that could be detrimental to the sanctity of other sovereign nations. Currently the sanctions put on Tornado Cash task Americans with the job of not allowing certain persons to gain access to funds that may damage the country.
Hard to defeat
There is the belief that these sanctions will do very little to dissuade users from doing business on the platform. The platform operates without any centralized control as the platform is mostly controlled by a DAO. This means that it was designed to be near-unstoppable as no third party would have the ability to control it. The designers also made the platform open source so anyone could come in and change the code or design. This all means it is technically impossible to apply any type of sanctions to the protocol.
Currently more than 40 addresses were put on the list involving Tornado Cash. Circle blacklisted teh sanctioned Tornado addresses freezing over $75K worth of USDC and the GitHub and Website of the company are down as well. The developer of Tornado Cash , Roman Semenov has also seen his GitHub suspended.