U.S. Treasury Sanctions Crypto Mixer Tornado Cash, Accounts Disabled and TORN Token Tanks
In a major announcement on Monday, August 8, the U.S. Treasury Department announced that it has barred all individuals and American companies from using the popular crypto mixer Tornado Cash. This crypto mixing service allowed users to obfuscate their transactions.
The U.S. Treasury further alleged that North Korean hackers have been using this service to launder money. As per estimates, these hackers have illicitly laundered more than $7 billion so far.
Brian Nelson, under secretary of the Treasury for terrorism and financial intelligence said: “Despite public assurances otherwise, Tornado Cash has repeatedly failed to impose effective controls designed to stop it from laundering funds for malicious cyber actors on a regular basis and without basic measures to address its risks”.
Soon after the sanctions, there was a massive wipe out of accounts and websites linked to Tornado Cash from the internet. For e.g. a GitHub account that previously hosted a code relating to Tornado Cash said “account not found”, so did other websites liked to the project. Interestingly, emails to Tornado Cash also bounced with the messages: “The email account that you tried to reach is disabled”.
In an email statement to Bloomberg, a GitHub spokesperson said that the trade laws would require them to “restrict users and customers identified as Specially Designated Nationals (SDNs) or other denied or blocked parties, or that may be using GitHub on behalf of blocked parties. We examine government sanctions thoroughly to be certain that users and customers are not impacted beyond what is required by law”.
After his GitHub account was suspended, Tornado Cash founder Roman Semenov tweeted “Is writing an open source code illegal now?” However, some market analysts believe that the suspensions won’t stop the mixer from operating.
This is because the Tornado Cash smart contracts are deployed and running on Ethereum. This allows anyone with a wallet to use them.
Following the announcement, Tornado Cash’s native token TORN tanked more than 25% in a single day moving all the way closer to $20. Since February 2021, the TORN token has lost 95% of its value from its all-time high.
The Tornado Cash incident goes on to show that regulatory authorities will crack down on services where they find lack of transparency.