Acuant Compliance Sanctions Update 8.8.22: US Treasury Sanctions Virtual Currency Mixer Tornado Cash

Acuant Compliance Sanctions Update 8.8.22: US Treasury Sanctions Virtual Currency Mixer Tornado Cash

On August 8th, the US Treasury’s Office of Foreign Assets Control (OFAC) added Ethereum mixer Tornado Cash and 40 unique cryptocurrency addresses to the Specially Designated Nationals (SDN) list. According to the press release, Tornado Cash was used to launder more than $7 billion in virtual currency since its creation in 2019. OFAC specifically pointed to Tornado’s role in laundering over $55 million in value of cryptocurrency that was stolen from Axie Infinity’s Ronin Bridge protocol by the previously sanctioned Lazarus Group, the North Korea affiliated hacking organization.

Also highlighted was Tornado Cash’s involvement in funds stolen from Harmony Bridge in June of 2022 and from Nomad Bridge in early August 2022. The action by OFAC is being taken pursuant to Executive Order 13694, as amended, and follows the office’s previous virtual currency mixer Blender.io designation from May 6th.

What does this mean?

This designation means that US persons, entities and businesses must immediately stop transacting with the Tornado Cash entities identified in the SDN list. They are also banned from interacting or transacting with any related property or interests that are owned by more than 50% by one or more of the sanctioned individuals. More so, transactions to the designated cryptocurrency addresses must also be blocked.

What is a crypto mixer?

Crypto mixers are intended to mix cryptocurrency assets belonging to multiple users by making combinations with countless transactions to obfuscate the source and the destination of such assets. This anonymity is why criminals like to use crypto mixers to illicitly transfer funds.

About Tornado Cash1

Tornado Cash is a virtual currency mixer that operates on the Ethereum blockchain. It facilitates anonymous transactions by obfuscating their origin, destination and counterparties, with no attempt to determine their origin. The transactions received by Tornado are mixed (i.e., combined) before transmitting to their recipients, making it almost impossible to identify the origin, destination and counter-parties involved.

Tornado is being designated pursuant to Executive Order 13694, as amended, for having materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of, a cyber-enabled activity originating from, or directed by persons located, in whole or in substantial part, outside the United States that is reasonably likely to result in, or has materially contributed to, a significant threat to the national security, foreign policy, or economic health or financial stability of the United States and that has the purpose or effect of causing a significant misappropriation of funds or economic resources, trade secrets, personal identifiers, or financial information for commercial or competitive advantage or private financial gain.

How can Acuant (a GBG Company) help?

  • Transaction Screening in Real Time: Screen transactions in real time to detect any potential match to a user or cryptocurrency address.
  • Virtual Currency Risk Assessment: See the risk of virtual currency transactions and the risk of dealing with individuals and businesses that transact in virtual currencies. Learn more here.
  • Transaction Lookback: Screen past transactions to detect transfers made to newly sanctioned cryptocurrency addresses.

 

Learn more about how Acuant’s VCRA solution can help businesses be prepared for evolving cryptocurrency sanctions and regulations.

1 US Department of the Treasury Press Release for August 8, 2022

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