The US Treasury Bans Ethereum Mixer Tornado Cash
- Funds from most hacks on Ethereum were channeled through Tornado Cash.
- Over $1 billion in illicit money has been moved through the mixing service provider.
Tornado Cash, a decentralized cryptocurrency mixing service, has been added to the US Treasury Department’s banned list as part of its first on-chain DeFi protocol sanction. The department made this known in a document released on Monday.
According to the Treasury Department, Tornado Cash and 45 associated ETH wallet addresses have been added to the Specially Designated Nationals (SDN) list by the Office of Foreign Asset Control, meaning that their assets are barred and U.S. citizens are now forbidden from transacting with them.
Crypto mixing services have come under fire since the year began due to the growing number of crypto crimes that use mixing platforms to hide the transaction history of certain cryptocurrencies by mixing them with other users’ funds, making it difficult to trace a specific transaction.
According to Chainalysis research released in July, the 30-day moving average of value received by mixers hit an all-time high of approximately $52 million worth of cryptocurrency on April 19. This is about twice as much as what was recorded in the same period in 2021. There are also claims that sanctioned Russians are using mixers to access crypto services and break the rules.
In a statement, Under Secretary of the Treasury for Terrorism and Financial Intelligence Brian E. Nelson said:
Today, Treasury is sanctioning Tornado Cash, a virtual currency mixer that launders the proceeds of cybercrimes, including those committed against victims in the United States. 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. Treasury will continue to aggressively pursue actions against mixers that launder virtual currency for criminals and those who assist them.
Tornado Cash is a popular application amongst Ethereum users. It allows them to stay anonymous Users can deposit their assets into smart contracts and make withdrawals from different addresses, making it difficult to trace their on-chain activities.
While most Ethereum users rely on Tornado Cash for non-criminal purposes, cybercriminals and hackers use it as an exit, moving more than a billion dollars through the platform over the past year. Funds from most of the hacks on Ethereum were reportedly channeled through Tornado Cash.