By dividing a user's deposit into a random number of parts and distributing those pieces to other users, a cryptocurrency "mixer" essentially muddles up the transactions of individuals who make deposits to them. In exchange, you receive the same amount back (less fees) from other anonymous users.
Tracking stolen cryptocurrency becomes difficult since it may rapidly change hands from one person to dozens when 'mixed'.
Tornado.Cash joins Blender.io on the list of mixer websites that are now forbidden for US citizens to access after being sanctioned by the US Treasury today.
The US Treasury estimates that since Tornado's inception in 2019, more than $7 billion in virtual currency has been laundered on the platform.
However, it's the $455 million from the "Lazarus Gang," a hacker group supported by the North Korean government, is what officials find most upsetting.
The sanctions also covered 44 wallets, making it prohibited to receive or send money to any those addresses.
Tornado Cash made an effort to abide by the rules, but ultimately failed.
In attempts to comply with the US government but still function for it's users, Tornado Cash implemented improvements like a screening tool to stop money from travelling between it and bitcoin wallets that officials say are tied to illegal activity.
Despite that, the Lazarus Group and other hackers were still able to transmit money to Tornado Cash for money laundering, according to a law enforcement investigation of open cryptocurrency transactions, the official added.
“Despite public assurances otherwise, Tornado Cash has repeatedly failed to impose effective controls designed to stop it from laundering funds for malicious cyber actors on a regular basis and without basic measures to address its risks,” Under Secretary of the Treasury for Terrorism and Financial Intelligence Brian Nelson said in a statement. “Treasury will continue to aggressively pursue actions against mixers that launder virtual currency for criminals and those who assist them.”
Treasury officials added that they hope this motivates the private sector and partner nations to help in regulating illegal use of crypto.
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Author: Mark Pippen
London News Desk
Breaking Crypto News
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