US bans virtual currency mixer Tornado Cash for its role in money laundering

The US Treasury sanctioned a notorious virtual currency mixer. Since 2019, it has been used to launder over $7 billion in virtual currency.

Tornado Cash operates on the Ethereum blockchain and indiscriminately facilitates anonymous transactions by obfuscating their origin, destination, and counterparties.

“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,” said Under Secretary of the Treasury for Terrorism and Financial Intelligence Brian E. Nelson.

Cybercriminals have allegedly laundered more than $7 billion since the creation of Tornado Cash. Lazarus Group, a threat actor sponsored by North Korea, used Tornado Cash to launder $455 million in the largest known virtual currency heist to date.

The Treasury added that Tornado Cash was used to launder more than $96 million of malicious cyber actors’ funds derived from the Harmony Bridge Heist and at least $7.8 million from the Nomad Heist.

Treasury added that cybercriminals exploit the virtual currency ecosystem to obfuscate the proceeds from the illicit cyber activity and other crimes.

“While most virtual currency activity is licit, it can be used for illicit activity, including sanctions evasion through mixers, peer-to-peer exchangers, darknet markets, and exchanges. This includes the facilitation of heists, ransomware schemes, fraud, and other cybercrimes.”

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