US Government Prohibits Citizen Interaction with Tornado Cash

The U.S. Government has only now authorised tornado currency, a move that would probably outlaw any location that transacted with it. After punishing Bitcoin Mixer Blender in May, this is not the first time the U.S. Treasury’s Office of Foreign Asset Control (OFAC) has targeted cryptocurrency mixers.

Senior Crypto Analyst Dylan LeClair states that CirclePay’s USDC has banned all U.S. Treasury-approved Ethereum addresses.

Since its inception in 2019, OFAC reports that the virtual currency mixer Tornado Cash has been used to launder about $7 billion. The United States asserts that Tornado Cash is a sanctuary for cybercrime in North Korea and other criminal organisations.

In a press release, Treasury’s Under Secretary for Terrorism and Financial Intelligence, Brian E. Nelson, stated, “Today marks the first time Treasury has sanctioned a virtual currency mixer.”

“Virtual currency mixers that facilitate illegal transactions endanger national security interests in the United States. We are taking action against the DPRK’s illegal financial behaviour and will not permit state-sponsored theft and its facilitators to go unpunished.”

Blender and Tornado Cash have been related to Lazarus Group, the hacking group responsible for the largest thefts of virtual currency. Its victims were Axie Infinity, from which nearly $620 million were stolen, and approximately $20.5 million was laundered through Blender.

According to data from blockchain company Nansen, Ethereum transactions skyrocketed following the hack of Axie Infinity last year.

Crypto enthusiasts are unhappy with the decision. Jerry Brito, executive director of the Coin Center, told Fortune that the sanction violates the “constitutional right to anonymity” of Americans. Brito says everyone who communicates with addresses might be in breach, even if they received unauthorised payments via Tornado Cash. He argues that since the fund is open source, nothing prevents a money launderer from modifying the code and generating a chain fork.

On a press teleconference, a representative of the U.S. Treasury Department said that they would continue to watch mixers and take swift action if necessary.

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