In its battle against money laundering within the crypto sphere, the US Treasury Department is going after the Ethereum mixing tool Tornado Cash this time. The decision has been made: American users will no longer be able to carry out transactions through the platform.
In a press release published on its official website, the US Treasury Department, via the Office of Foreign Asset Control (OFAC), announced the deployment of sanctions against the Ethereum mixer Tornado Cash. The application is indeed banned from the United States.
According to authorities across the Channel, the platform has facilitated the laundering of more than $7 billion since its creation in 2019.
“Today, the Treasury sanctions Tornado Cash, a virtual currency mixer that launders the proceeds of cybercrimes, including those committed against victims in the United States”
said Under Secretary of the Treasury for Terrorism and Financial Intelligence Brian E. Nelson
A tool too useful to malicious individuals
Tornado Cash is an Ethereum mixer that allows transactions to be carried out in complete confidentiality; that is to say without the address of origin and that of the recipient and the persons involved being able to be traced. The application uses the principle of zero-knowledge proof to preserve the anonymity of its users.
This is because when a user deposits money on the platform and wishes to make a funds transfer, Tornado Cash generates a key with a secret hash called a private pledge. This then allows the transaction to not be traceable.
If the application proves to be useful for those who do not want their confidential data to be disclosed, it is just as much for hackers who do everything to escape the radar of the authorities controlling illicit activities.
According to the press release from the American authorities, the North Korean criminal organization Lazarus would have used Tornado Cash to launder 455 million dollars stolen during various hacks. Those responsible for the hacking of the 100 million stolen from Harmony’s Horizon platform thus used the mixer to cover their tracks. We also learned that $7.8 million from the recent Nomad hack was laundered through the Tornado Cash channel.
The Treasury Department does not want to take any risks with Tornado Cash
Tornado Cash wanted to comply with the rules of the game. In April, officials revealed that they use the Chainalysis tracking tool to prevent sanctioned addresses from using the platform. This does not seem to have convinced the American authorities. Brian E. Nelson said:
“Despite public assurances to the contrary, Tornado Cash has repeatedly failed to impose effective controls intended to prevent it from laundering funds to malicious cyber actors on a regular basis and without basic measures to address its risks. The Treasury will continue to take strong action against mixers who launder virtual currency on behalf of criminals and those who assist them. »
Other mixers, such as Blender.io, are also in the sights of the US Treasury Department because they pose illicit financing risks.
“Virtual currency mixers that aid criminals pose a national security threat to the United States. The Treasury will continue to investigate the use of mixers for illicit purposes and use its powers to address illicit funding risks in the virtual currency ecosystem.”
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