The United States has sanctioned Tornado Cash, a decentralized crypto-mixing service, after the Treasury’s Office of Foreign Assets Control (OFAC) concluded it was used in a money-laundering scheme. This move has raised concerns about the future of decentralized networks and crypto mixers, with many proponents of crypto arguing that the move is unwarranted.
Tornado Cash is a popular crypto-mixing service, which enables users to anonymize and obfuscate their transactions. It uses smart contracts to achieve this level of security. Rather than determining the origin of a transaction, it mixes it up, obfuscating details about both the sender and recipient.
Tornado Cash was found to be used in a number of high-profile heists, including the recent theft of $1.2 million from Inverse Finance. It has also been linked to the Lazarus hacking group, which has stolen hundreds of millions of dollars from decentralized finance platforms.
Tornado Cash was used by the Lazarus group to launder their ill-gotten gains. Its use by the Lazarus group will likely add political pressure to curb the proliferation of crypto mixers. However, it’s unclear whether US authorities will arrest other crypto mixer developers.
A criminal investigation into the activities of Tornado Cash has been launched by the Financial Advanced Cyber Team division of FIOD. As part of that investigation, one of its co-founders has had his Github account permanently deleted.
Tornado Cash was created by a team with no headquarters or office location. One of its co-founders, Alexey Pertsev, was arrested last month in the Netherlands for allegedly laundering illegally-stolen funds.
