U.S. OFAC Sanctions on Tornado Cash For $7 Billion Funds Laundering

The Tornado of $7 Billion Cash Laundering

Tornado cash is used to launder approximately more than 7 Billion USD since its existence in 2019. This includes three major names from different geographies: Lazarus Group, South Korea, Harmony Bridge Heist, and the Nomad Heist. Lazarus Group stole about 455 Million USD in 2019, 96 Million USD funds derived from Harmony Bridge Heist, and &.8 Million USD from Nomad Heist.

Now, the U.S Department of the Treasury’s Office of Foreign Assets Control (OFAC) sanctioned the virtual mixer Tornado Cash for laundering 7 Billion USD worth of virtual currency.

Treasury is sanctioning 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.

Tornado Cash has repeatedly failed to impose efficient controls to stop money laundering for malicious cyber attacks. The Treasury will leave no grounds to step against mixers laundering virtual currency for criminals.

OFAC Vs Tornado Cash

The U.S. authorities have decided to hunt down the bad components of the cryptocurrency market that are affecting the virtual currency ecosystem. These include names like Tornado Cash and Blender.io.

From the reports, it is clear that cybercriminals are using these channels to obfuscate the funds via activities like mixers, peer-to-peer exchangers, and darknet exchanges. This opens a wide window for crimes such as heists, ransomware, and other fraudulent schemes.

Tornado Cash is one such channel that may be used by cybercriminals. It is a virtual currency mixer operating on Ethereum Blockchain. It helps to make a transaction anonymous from the origin to the destination. Tornado receives tons of transactions and pools them together and shuffles it strongly.

According to the US authorities and OFAC, these mixing platforms can be a threat to national security. Henceforth, the Treasury will continue to hit the mixer regarding illicit financial risks in the virtual currency system.

The Tornado Cash case is considered as the highest profile case of its kind. However, the OFAC brought similar sanctions on Blender.io in May 2022.