U.S. Treasury Prohibits Tornado Cash Transactions

Wallet addresses associated with cryptocurrency mixer Tornado Cash have been sanctioned by the U.S. Treasury for their role in several hacks and exploits, including the Harmony Bridge hack from June and the recent Nomad bridge exploit.

The Treasury's Office of Foreign Assets Control says transactions with Tornado Cash are now prohibited and U.S. citizens can be held civilly liable "without having knowledge or reason to know it was engaging in such a violation." Those who receive cryptocurrency from the blocked wallets must report the transactions to OFAC "within 10 business days."

Tornado Cash is also used by the Lazarus Group according to a press release. Lazarus Group is a North Korea-sponsored hacking group that was sanctioned by the Treasury in 2019.

"Mixers should, in general, be considered as high-risk by virtual currency firms, which should only process transactions if they have appropriate controls in place to prevent mixers from being used to launder illicit proceeds," the Treasury said in a press release Monday.

Tornado Cash, which was co-founded by Roman Semenov back in 2019, is a decentralized protocol that allows users to send any ERC-20 token to another address anonymously. The protocol is completely community owned — the developers have no control, according to the protocol website. The protocol has a total of 12,243 users according to this Dune Analytics dashboard from @poma, and more than $7.6 billion has been sent through Tornado Cash, including more than $7.8 million from the Nomad bridge exploit and $96 million from the Harmony One incident.

Tornado Cash was also used in several NFT-related incidents, including the Frosties rug pull and a fake Phantom Galaxies mint.

In February, a significant amount of funds transferred to the LooksRare team were moved through Tornado Cash.

"We encourage everyone in the team to use TornadoCash," said Zodd, from LooksRare, in a tweet. "Privacy is a fundamental right and, as anons, it’s practically a requirement. Welcome to decentralization."

TORN, Tornado Cash's governance token, is down more than 17 percent in the past 24 hours to $24.33.

Author Bio

TD Marquis

A veteran journalist and editor with more than a decade's worth of experience, TD helped a small community newspaper in Vermont win a New England Newspaper Association Right to Know Award in 2014. TD helped compile five years' worth of invoices to uncover a long-established practice of small-town government officials paying themselves six figures to do small jobs around town. TD discovered NFTs with Top Shot in 2021 and his first NFTs on ETH were saving two Mooncats. He is now the proud owner of Rowhome #61 and 1,300 other NFTs of questionable value. He also sent 4 ETH to a fake Mekaverse site and wants Lucky Trader readers to avoid the same fate.

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