Tornado Cash has been prohibited by the United States Treasury Department. Indeed, the federal agency’s Office of Foreign Assets Control sanctioned the popular Ethereum mixing tool on Monday.
As Under Secretary of the Treasury for Terrorism and Financial Intelligence Brian E. Nelson stated in a press release:
“Today, the 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 to the contrary, Tornado Cash has repeatedly failed to impose effective controls designed to prevent it from routinely laundering funds on behalf of malicious cyber actors, without taking basic measures to address its risks. The Treasury will continue to take aggressive action against mixers who launder virtual currencies for criminals and those who help them. “
Tornado Cash enables Ethereum users to conceal their identity by placing assets into smart contracts and then withdrawing them to a different address, making their on-chain behavior more difficult to monitor.
Following this, he rose to prominence as a result of his popularity among pirates. When a DeFi attack happens on Ethereum, the hackers typically employ Tornado Cash to hide their traces and flee with the stolen cash.
Over a billion dollars in illegal money has passed over this protocol in the last year, including a $550 million attack on Axie Infinity’s Ronin Bridge in March.
Tornado Cash generated outrage in the cryptocurrency world in April when it stated that it has begun utilizing the Chainalysis oracle to block addresses sanctioned by OFAC. “Maintaining financial privacy is critical to safeguarding our freedom, but it should not come at the expense of noncompliance,” Tornado Cash warned at the time, expressing concerns about the system’s degree of decentralization.
