Ethereum-Based Coin Mixer Tornado Cash has received a sanction on the United States Department of Treasury’s Specially Designated Nationals And Blocked Persons List (SDN). The sanction now prohibits US investors from using the coin-mixing service’s chain in illegal activity.
According to the US Department of Treasury, the action was put into effect on Monday. Coin Mixers are used by companies to hide the origin of any particular transaction with Ethereum-based Tornado Cash becoming extremely popular.
In a press release, 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.”
Brian E. Nelson, Under Secretary of the Treasury for Terrorism and Financial Intelligence
They were initially conceived to keep investors’ transactions private, as they obscure the path to the fund’s source. However, the Tornado Cash mixer earned a sanction after becoming a popular mixer for hackers looking to hide their tracks in laundering schemes.
Tornado Cash is the latest mixer to receive a sanction from the OFAC, after Blender was previously sanctioned. North Korea allegedly used Blender to launder over $500 million once stolen from Axie Infinity in the form of Ethereum.
Tornado Cash sparked controversy after it announced that it would use Chainalysis to block addresses previously sanctioned by OFAC. The protocol is popular among hackers looking to hide their tracks after a theft. Previously Tornado Cash was used by the hackers who made away with 440 Ethereum from Bent Finance.
Tornado Cash was also in the hot seat back in February after the W3beMemes meme coin pulled the rug under holders, dropping the value of the coin by nearly 100% and causing thousands of dollars worth of loss.
Tornado Cash has not yet commented on the development publically.