The U.S. Treasury Department sanctioned Tornado Crash’s website and blocked the associated smart contracts last Monday.
The Treasury Department announced the sanctions list of more than 40 Ethereum addresses linked to Tornado Crash including donation address, proxy address, Gitcoin grants, a few USDC addresses and several others, freezing over $75,000 worth of USDC, banning all Americans from using Tornado Crash or any EThereum wallet addresses tied to it.
Tornado Crash is an Ethereum mixing tool that lets users make private transactions on the Ethereum Network. Pooling together cryptocurrency deposited by many users and mixing them up so transactions are obscured, concealing the identity of the people involved in transactions.
Allegedly, it was claimed that Tornado Crash had been used “to launder more than $7 billion worth of virtual currency since its creation in 2019.” according to Dune Data.
Tornado was used in some high-profile crypto heists this year, both linked by the Lazarus Group, a North Korean state-sponsored hacking group tied to the $625 million hack of Axie Infinity’s Ronin Network last March; an over $96 million attack on U.S. startup Harmony Bridge hack in June and just last weeks Nomad Bridge hack to which $7.8 million was stolen according to the Treasury Department.
Last April, Tornado Crash sparked controversy when they announced they were starting to use Chainalysis, a blockchain tracking firm preventing addresses sanctioned by the U.S. government. In a press release issued by the under secretary of the treasury for terrorism and financial intelligence, Brian E. Nelson said.
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.
What makes the sanction interesting is that Tornado Crash is a popular application but also gained notoriety due to its popularity among hackers, making a significant amount of value that flows through it but is not associated with any illicit activities. Tornado has not yet publicly commented on the development.