U.S. citizens can no longer legally use an online service used to hide stolen cryptocurrency after the federal government today sanctioned Tornado Cash.
The Department of Treasury ordered assets of the Ethereum blockchain cryptocurrency mixer to be frozen and says civil and potentially criminal penalties await anyone under U.S. jurisdiction who uses the service.
Cybercriminals have used Tornado Cash since its founding in 2019 to launder more than $7 billion of cryptocurrency, estimates Treasury. A hefty chunk of that amount – $455 million – includes money stolen by North Korean hacking group Lazarus Group. Pyongyang’s secretive, hereditary Stalinist monarchy fuels its nuclear weapons program with stolen cryptocurrency.
Today’s listing of Tornado Cash comes after it “repeatedly failed to impose effective controls designed to stop it from laundering funds for malicious cyber actors on a regular basis,” says Brian Nelson, Treasury undersecretary for terrorism and financial intelligence.
Tornado Cash has been the “go-to mixer of North Korean cybercriminals for over a year or more,” says Ari Redbord, head of legal and government affairs at analytics firm TRM Labs.
The sanctions mark a second attempt by Treasury to crack down on mixers, which pool potentially tainted funds and randomly distribute them to destination wallets in a bid to make tracing stolen cryptocurrency