The United States imposed sanctions on cryptocurrency service Tornado Cash on Monday. The mixing service is accused, among other things, of helping hackers from North Korea launder the proceeds of their cybercriminal activities.
Since its inception in 2019, Tornado Cash is said to have laundered more than $7 billion worth of stolen cryptocurrency. A senior US Treasury official said, according to Reuters news agency. Monday’s move will freeze all of the Monetary Service’s US assets.
Lazarus Group launders funds with Tornado Cash
According to the US government, the Lazarus Group alone, a well-known hacking group backed by the North Korean government, laundered at least $455 million through Tornado Cash. The hacker group is already subject to US sanctions. According to US law enforcement agencies, she is behind the internationally acclaimed Sony Pictures and WannaCry hacks. The FBI has put several suspected members out for investigation. The theft of almost one billion US dollars from Bangladesh’s central bank, which is also allegedly controlled by the Lazarus Group, was only prevented by coincidence. In 2021 alone, North Korean hackers are said to have stolen nearly $400 million in cryptocurrency. The United States and South Korea have been claiming for years that North Korea is using the stolen money to finance its missile program, among other things. Pyongyang denies these allegations.
Tornado Cash, in turn, is accused of helping cybercriminals like the Lazarus Group by hiding transaction details and failing to implement meaningful anti-money laundering safeguards. Despite previous calls for Tornado Cash to make changes, criminal activity continued, according to the US Treasury Department official quoted by Reuters. The sanction decision was then made.
Target mixing services
In May, the US Treasury Department broadly targeted cryptocurrency service Blender and imposed sanctions on such a mixing service for the first time. This is a software tool that combines and encrypts cryptocurrencies from thousands of addresses, i.e. “mixes” transactions.
Mixing services such as Blender or Tornado Cash have long played a role in large-scale crypto thefts. Tornado Cash was reportedly used to launder about $100 million from a June hack by cryptocurrency firm Harmony and crypto funds stolen from a gang heist at blockchain bridge Nomad just last week. Cryptoassets captured during the hack of the Crypto.com crypto exchange were probably transferred into liquid funds via the Tornado Cash.
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