What Does the Tornado Cash Decision That Shook the Market Mean?

Tornado: The US Treasury Department has added popular cryptocurrency mixing service Tornado Cash to its sanctions list. The decision means Americans are banned from using the service. Meanwhile, the Ministry has blacklisted 44 Ethereum addresses along with Tornado Cash. Similar sanctions were imposed on another popular service, Blender.io, in May 2022.

Americans will no longer be able to use Tornado Cash!

AmkNews.com As you follow, the US Treasury Department added popular cryptocurrency mixer Tornado Cash to its sanctions list on Monday. Thus, it banned Americans from using a service that the government says ‘launders the proceeds of cybercrime’.

Crypto asset mixers are designed to hide traces of funds by blending one’s tokens with the asset pool of other individuals on the platform. They go beyond traditional crypto platforms to further conceal the identity of the people involved in the transactions. Tornado Cash is used by some people as a legitimate way to protect their privacy. However, the US government says it encourages illegal activities, including ‘facilitating robberies, ransomware schemes, fraud and other cybercrime’. “Virtual currencies aiding criminals are a threat to U.S. national security,” the Treasury Department said.

What’s behind the Tornado Cash ban?

We got involved with Tornado in the theft of $615 million in tokens from Ronin this year. Also, attackers used it in some high-profile crypto heists, including Harmony. Both were affiliated with the Lazarus Group, a North Korean-backed hacking group. Blockchain analytics firm Elliptic has made some key findings. Elliptic determined that proceeds from crimes such as ransomware, hacking and fraud were laundered with Tornado Cash. It also found that all of the $100 million stolen from the Harmony bridge in June was laundered through the service.

The US Treasury gave a much higher figure for Tornado Cash, saying it has been used to launder more than $7 billion in virtual currency since its launch in 2019. This figure represents the total value of crypto assets sent through Tornado Cash. Some Blockchain analytics tools have managed to ‘scramble’ the crypto sent via Tornado to determine the source of the funds. Elliptic says it can trace crypto stolen from Harmony to several new Ethereum wallets, for example.

The Treasury Department had similarly sanctioned Blender.io, another popular service, in May 2022. Actions against Tornado Cash follow these sanctions. Foreign Minister Antony J. Blinken made a statement on Monday. “The United States will continue to pursue actions against agitators who launder virtual money for criminals and those who assist them,” Blinken said.

What is covered by the Tornado Cash ban?

The Office of Foreign Assets Control (OFAC) has added Tornado Cash and associated crypto wallet addresses to its “Specially Designated Citizens list.” Anyone interacting with these wallet addresses is now likely to face sanctions.

“All transactions involving any property or interest in property or interest owned by U.S. persons or persons designated or otherwise blocked within the U.S. are prohibited, unless authorized or exempted by a general or special license granted by OFAC,” the Treasury Department said. With this decision, money transfers by US citizens to addresses associated with Tornado Cash became prohibited.

However, enforcing such a move is quite difficult for the government, according to Coin Center. Also, it’s possible that it’s overly restrictive. This is because there is no single person or organization behind the use of Tornado Cash. Because Tornado is an open source tool. Coin Center noted that the decision appears to be “banning a tool like any technology that can be used for good or bad purposes.”

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Larry Brown

I graduated from Yale University, Department of Television. I have been a professional news writer for 3 years. I am continuing my career here by establishing amknews.com site 3 months ago.