Today, the U.S. Treasury Department placed the Ethereum mixing service on its Specially Designated Nationals List. Today, the U.S. Treasury Department approved Tornado Cash as an Ethereum mixing tool.
The body announced Monday that it had added Tornado Cash and a long list Ethereum addresses to its Specially Designated Nationals List. This bans American citizens from using the tool, or transacting with these addresses.
Tornado Cash allows users to make private transactions on Ethereum. It works by pooling cryptocurrency from many users and mixing them together to obscure transactions.
According to the Treasury Department’s announcement, there were a few Ethereum addresses that are linked to Tornado Cash. These addresses also include addresses where funds could be donated. Andrew Thurman from Nansen says that the list of banned addresses includes Gitcoin’s address, which is an Ethereum-based crowdfunding platform for open-source projects.
According to the Treasury Department, these measures were taken because criminals used Tornado Cash as a means of laundering money. The statement stated that the U.S. Department of the Treasury’s Office of Foreign Assets Control had sanctioned Tornado Cash, a virtual currency mixer, for laundering more than $7 billion in virtual currency since its creation.
An announcement stated that Lazarus Group was a North Korean state-sponsored hacking organization and used Tornado Cash in order to launder more than $96 million. It had hacked Harmony Bridge back in June.
It was also reported that Tornado Cash was used by criminals to conceal $7.8million stolen from last Wednesday’s Nomad Bridge hack.
Tornado Cash stated April that it used a tool by Chainalysis, a blockchain tracking firm, to block addresses from accessing the privacy app sanctioned in the U.S.
The U.S. authorities didn’t find this satisfactory. Brian E. Nelson, Under Secretary of Treasury for Terrorism and Financial Intelligence, said: “Despite public assurances to the contrary, Tornado Cash repeatedly failed to impose effective control measures designed to prevent it from laundering funds for malignant cyber actors on an ongoing basis and without basic steps to address its risks.”
Ethereum is the network behind second-largest cryptocurrency market cap. It also hosts thousands of tokens. Its native cryptocurrency, ETH, trades at just $1,800 with a market cap exceeding $219 billion.