• Any transactions related to the Platform are prohibited in the United States
• Possibilities for data protection are also limited by the ban
“Today, the US Treasury Department’s Office of Foreign Assets Control (OFAC) sanctioned virtual currency mixer Tornado Cash, which has laundered more than $7 billion worth of various virtual currencies since its inception in 2019 – including over $455 million from North Korean-backed Lazarus Group,” the US Treasury Department announced in a press release Aug. 8.
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Tornado Cash used in several major money laundering hacks
The Lazarus Group is said to be behind the 625 million ronin hack discovered in March and laundered much of the stolen crypto via Tornado Cash. With the mixing service, customers transfer their cryptocurrencies to a common Tornado pool and can then withdraw cryptocurrencies from this pool in the value paid in. This is to ensure that transactions cannot be traced and data protection is guaranteed. While non-fraudulent users are also using the open-source platform, around $1.5 billion was laundered from the Crypto.com hack at Tornado Cash, according to crypto analytics firm Elliptic, and its trails, according to the US Treasury Department stolen equipment from Harmony Bridge and Nomad Bridge in this way.
The USA wants to take stronger action against money laundering via mixing services
“These hacks are more than just hacks, they pose a serious threat to national security. It’s not just about money laundering – it’s about money laundering that will be used to distribute weapons,” said Ari Redbord of analysis firm TRM Labs to CoinDesk. The US Treasury Department hopes that the ban on the platform for these illegal activities will reduce money laundering – just a few months ago, another, smaller mixing platform, Blending.io, was blocked.
A ban on Blending.io and Tornado Cash will not remain the case: “The United States will continue to take action against mixers who launder digital currencies for criminals or support them in doing so,” Secretary of State Anthony Blinken said in a press release from the US Treasury Department statements.
What does the ban mean for privacy in the US?
Specifically, Tornado Cash’s blacklisting means that no one in the US will be allowed to conduct transactions related to the platform – violators face a penalty. While most naturally support the ministry’s decision to crack down on money laundering, experts are talking about what the ban on mixing services means for privacy. This raises the question of why the government does not take targeted action against fraudsters instead of making it more difficult for people who act legally to protect their data. Coin Center, a non-profit organization in the field of crypto regulation, puts it in an article as follows: “This is the sanctioning of an inherently neutral tool that, like any other technology, can be used for good and bad purposes.”
It remains to be seen what impact the ban will actually have on money laundering and data protection in general.
Olga Rogler / Editor finanzen.net
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