TLDR:
The U.S. sanctioned Tornado Cash, the mixing token that makes Ethereum transactions untraceable. The U.S. Treasury’s Office of Foreign Asset Control posted the updated sanctions list. The order makes it illegal for U.S. citizens to use Tornado Cash. Tornado Cash is open source, and many believe the sanctions deny Americans their “constitutional right to anonymity.”
Tornado cash has just today been sanctioned because of the U.S. Government, a move which may presumably prohibit any address that interacted in it. This isn’t the very first time the U.S. Treasury’s Office of Foreign Asset Control (OFAC) targeted crypto mixers after sanctioning Bitcoin Mixer Blender back May.
In accordance with Senior Crypto Analyst Dylan LeClair, CirclePay’s USDC has officially blacklisted every Ethereum address sanctioned because of the U.S. Treasury.
In accordance with OFAC, the virtual currency mixer Tornado Cash may be accustomed to launder around $7 billion of virtual currency since its creation in 2019. The U.S. claims that Tornado Cash is really a haven for malicious cyber activities in Northern Korea along with other criminal groups.
“Today, for the very first time, Treasury is sanctioning a virtual currency mixer,” said Under Secretary of this Treasury for Terrorism and Financial Intelligence Brian E. Nelson inside the news release.
“Virtual currency mixers that assist illicit transactions threaten U.S. national security interests. We have been taking action against illicit financial activity because of the DPRK and can not allow state-sponsored thievery and its own money-laundering enablers going unanswered.”
Blender and Tornado Cash have already been associated with Lazarus Group, a cyber hacking group which has carried the biggest virtual currency hacks up to now. Its victims were Axie Infinity, that almost $620 million were stolen, and around $20.5 million was applied to Blender to launder the illicit proceeds.
In accordance with data from blockchain firm Nansen, Ethereum transactions spiked after Axie Infinity’s hack this past year.
Crypto advocates aren’t pleased with the move. Jerry Brito, executive director of Coin Center, told Fortune which the sanction denies Americans “their constitutional to anonymity.” In accordance with Brito, anyone who interacts with addresses could possibly be in violation, even though they received funds from Tornado Cash without their consent. He believes that as the fund is open source, nothing stops a money launderer from tweaking the code and developing a fork of this chain.
The U.S Treasury Department official said over a press call they would continue monitoring mixers and would immediately do something when required.