The Treasury Department sanctioned cryptocurrency mixer Tornado Cash on August 8, saying the service has been used to launder over $7 billion worth of virtual currency.
Cryptocurrency mixers, such as Tornado Cash, make it more difficult to track cybercriminals’ funds by blending tokens with other users’ assets on the platform. While Tornado Cash is used by many for legitimate virtual currency activity, the Treasury Department said it can also be used “for illicit activity.”
“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,” Under Secretary of the Treasury for Terrorism and Financial Intelligence Brian E. Nelson said in a statement.
Tornado Cash played a role in laundering over $455 million stolen by the Lazarus Group, a Democratic People’s Republic of Korea (DPRK) state-sponsored hacking group. The group was sanctioned by the United States in 2019, in one of the largest known virtual currency heists to date.
According to the agency, Tornado Cash was also used to launder more than $96 million of malicious cyber actors’ funds derived from the June 24 Harmony Bridge Heist, and at least $7.8 million from the August 2 Nomad Heist.
The Treasury Department said virtual currency firms should consider mixers to be considered “high-risk,” and should only process transactions if proper controls are in place to prevent illicit activity.
“The United States will continue to pursue actions against mixers laundering virtual currency for criminals and those who assist them,” Secretary of State Anthony Blinken said in a statement.