The United States on Monday imposed sanctions on Tornado Cash, a leading “crypto mixer” for virtual currency transactions, which US officials describe as a money-laundering hub, including by North Korean hackers.
The Treasury said Tornado Cash was used to transfer at least $96 million in funds stolen in June from cryptocurrency exchange Harmony Bridge, and another $7.8 million of the nearly $200 million in cryptocurrency hacked from similar service Nomad.
In addition, Tornado Cash was used to transfer and disguise $455 million of the more than $600 million in ether, the leading virtual currency, stolen in April from the Axie Infinity game via the Ronin network.
According to the US Federal Bureau of Investigation, the theft, which the Treasury Department has described as the largest known crypto theft to date, was carried out by North Korean state-owned hacking units known as the Lazarus Group and APT38.
Tornado Cash is one of the leading mixers, also known as tumblers, that help people hide the movement of their cryptocurrencies such as Bitcoin and Ethereum by mixing them with other users’ transfers.
Tornado Cash “has been used to launder more than $7 billion worth of virtual currency since its inception in 2019,” the Treasury Department said.
In May, the Treasury Department sanctioned another major crypto mixer, Blender.io, which it said was also used to process crypto funds stolen by North Korean groups.
U.S. officials say mixer services are not illegal per se, but are often used to move illicit funds, and that other mixers and anonymity-enhancing technologies in the crypto ecosystem are under scrutiny.
The sanctions prohibit US individuals or companies from using Tornado Cash and risk losing those funds if they do.