The United States Department of the Treasury’s Office of Foreign Assets Control (OFAC) has officially banned the on-chain privacy network and Ethereum-based cryptocurrency mixer, Tornado Cash. This will make it the second of such service providers that has been banned by the United States OFAC after Blender.io

This announcement was made in a press release on Monday, 8th August 2022. Under Secretary of the Treasury for Terrorism and Financial Intelligence, Brian E. Nelson, stated in this press release that OFAC has updated it’s specially designated nationals to include Tornado Cash because they are a virtual currency mixer that launders cybercrime loot, including those committed against victims in the United States.

Brian added that Tornado Cash had failed to impose any effective controls to stop it from being used as a money laundering tool by cyber criminals on a regular basis while operating without any attempts at introducing basic measures to combat it’s risks. This move comes after the United States OFAC earlier sanctioned another virtual currency mixer, blender.io, because of the same problems.

According to the announcement, Tornado Cash has been used to launder virtual currencies worth over $7 Billion since it’s creation in 2019. This also includes over $455 Million stolen by the Lazarus Group (a Democratic People’s Republic of Korea state-sponsored hacking group) in what is widely regarded as the largest ever virtual currency heist in the history of mankind.

The Lazarus Group and other North Korean syndicates are regular users of the virtual currency mixer and are widely believed to be behind several high-profile cryptocurrency hacks which include the $640 million Ronin cross-chain bridge hack and the $100 million Harmony bridge exploit. The United States OFAC have reiterated that by this decision, they are honouring their obligation to aggressively pursue action against virtual currency mixers used to launder funds by criminals and those who assist them.

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