US Announces Sanctions Against Currency Mixer Tornado Cash | Money Laundering News

The US accuses the virtual currency mixer of laundering hundreds of millions of dollars stolen by North Korean-backed hackers.

The US Treasury Department has announced sanctions against virtual currency mixer Tornado Cash, which it says helped launder more than $455 million for the Lazarus Group, a hacking organization associated with the North Korean government.

The Treasury Department said in a statement Monday that Tornado Cash has been used to launder more than $7 billion in virtual currency since its launch in 2019.

“Despite public assurances to the contrary, Tornado Cash has repeatedly failed to impose effective controls intended to prevent it from routinely laundering funds to malicious cyber actors and without basic measures to address its risks,” the deputy said. -Treasury Secretary for Terrorism and Finance. Intelligence Brian E Nelson in the statement.

The United States and South Korea have accused North Korea of ​​using hackers to steal funds that could be used to fund its weapons program, a charge North Korea denies. The sanctions ban Americans from using the blender and freeze all of its American assets.

The Lazarus Group – a North Korean state-sponsored hacking group – is subject to US sanctions and has been responsible for several major data breaches, including one against Sony Pictures in 2014. These breaches may be motivated by financial or political reasons.

A report by blockchain analytics firm Chainalysis found that North Korea launched at least seven attacks on cryptocurrency platforms in 2021, successfully stealing nearly $400 million worth of digital assets.

A United Nations panel that monitors sanctions against North Korea has accused Pyongyang of using stolen funds to support its nuclear and ballistic missile programs to circumvent sanctions.

Tornado Cash was also used to launder $100 million in assets stolen from a hack against virtual currency company Harmony, according to the Treasury. The ministry said it gave the mixer the opportunity to crack down on these illicit activities, but failed to do so.

The Treasury noted that while most virtual currencies are used for legitimate purposes, they can also be a tool for those hoping to avoid scrutiny and circumvent laws.

“While most virtual currency activity is legal, it can be used for illicit activities, including sanction evasion through mixers, peer-to-peer exchanges, darknet markets and exchanges. “, reads the press release.

The Treasury first imposed sanctions on a currency blender in May when it targeted Blender, a software tool that aggregates and scrambles cryptocurrencies from thousands of addresses.

Hacking has been a persistent problem for crypto platforms, and experts say Tornado Cash has played a role in such crimes.

“Tornado is a popular and important tool for cybercriminals and state-backed hacking groups,” Tom Robinson, co-founder of Elliptic, a cryptocurrency analysis company, told the agency. Reuters press. “In total, Elliptic’s analysis shows that at least $1.3 billion in proceeds of crime such as ransomware, hacks and fraud were laundered through Tornado Cash.”

The U.S. Internal Revenue Service (IRS) said cryptocurrency and digital assets such as non-fungible tokens, also known as NFTs, have been subject to “mountains and mountains of fraud. “.

The IRS seized $3.5 billion worth of cryptocurrencies linked to financial crimes in fiscal year 2021, and cryptocurrencies have been consistently criticized for their potential criminal use.

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