Treasury Sanctions Crypto Program That Helped North Koreans Launder Funds


The Treasury Department on Monday issued sanctions against a cryptocurrency service that allowed North Korean hackers and others to launder billions of dollars worth of digital tokens stolen in virtual heists.

The service, Tornado Cash, is something called a mixer, and it aggregates digital assets to hide their ownership. Since its launch in 2019, the program has laundered more than $7 billion in digital assets, according to the Treasury Department. By adding the service’s website and 45 associated crypto wallets to the sanctions list, the administration is banning any American from transacting with them.

“Despite public assurances to the contrary, Tornado Cash has repeatedly failed to impose effective controls designed to prevent it from routinely laundering funds to malicious cyber actors and without basic measures to address its risks,” Brian Nelson, under -Secretary to the Treasury in charge of terrorism and financial intelligence. , said in a statement.

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In the past few months alone, cybercriminals have used Tornado Cash to wash crypto funds stolen in a series of high-profile hacks, the Treasury said.

The Lazarus Group, a cybercriminal gang that international investigators say is a key source of funding for North Korea’s weapons program, used the service to process more than $455 million it stole in April in the biggest crypto heist to date. Hackers have laundered more than $96 million from June’s attack on the Harmony blockchain bridge — and at least another $7.8 million from the Nomad bridge hack last week.

The sanctions mark the Biden administration’s second such action against a mixer. In May, he blacklisted a program called Blender, which the Lazarus group also used. The mixer has not appeared to be operational since then, a senior Treasury official said in a press briefing on Monday.

“Treasury will continue to take aggressive action against mixers who launder virtual currency for criminals and those who assist them,” Nelson said in the statement.

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Mixers are on track for a banner year with cybercriminals, according to a July report from blockchain analytics firm Chainalysis. He revealed that 23% of funds sent to mixers this year came from illicit crypto wallets, up from 12% in 2021.

The Treasury’s targeting of Tornado Cash should send a broader message to the crypto industry about the risks of trading with mixers, the official said, suggesting more sanctions against other similar services could be in the works. Classes.

Major crypto platforms have added dozens of staff, many with national security or law enforcement backgrounds, in recent years to upgrade their screens against illicit activity as the industry tries to shed its image as a refuge for criminals and terrorists.

Still, at least one industry voice criticized the Treasury’s decision. Jerry Brito and Peter Van Valkenburgh of crypto think tank Coin Center wrote in a blog post that Tornado Cash is a “neutral tool that can be used for good or bad like any other technology”.

“It is not a specific bad actor who is sanctioned, but rather it is all Americans who wish to use this automated tool to protect their own privacy when transacting online who have their freedom restricted without the benefit of a regular procedure. ,” they wrote.

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