The US Treasury Department has blacklisted Tornado Cash on the accusation that the platform helped bad actors harvest over $7 billion in cryptocurrencies.
American citizens will not be able to use the Tornado Cash mixer protocol due to the US law enforcement agencies’ recent crackdown on the cryptocurrency industry. The authorities considered Tornado Cash a threat to the country’s national security and placed the platform on blocked entities, making it illegal to send/receive money via Tornado Cash.
The volatility of cryptocurrencies and the industry’s potential role in cybercrimes have been a cause of concern among US regulators/lawmakers.
Seems like USDC has indeed blacklisted the @TornadoCash contracts, meaning if you had USDC deposited in Tornado you can not access it anymore even if everything you did was perfectly legit and legal. https://t.co/f5rpt4Ul9M
— Martin Köppelmann 🇺🇦 (@koeppelmann) August 8, 2022
The undersecretary for terrorism and financial intelligence, Brin Nelson, stated that Tornado Cash repeatedly got involved in laundering funds for cybercriminals despite “public assurance.”
It is worth noting that the State-backed North Korean Lazarus Group was blamed for stealing 1.7 billion worth of cryptocurrencies from different exchanges.
The Treasury Department claims that the platform laundered over $455 million in cryptocurrencies in 2022 via Lazarus Group, while overall, $7 billion have been laundered by Lazarus and other cybercrime groups.
Another cryptocurrency exchange under the radar of US authorities and may be facing blacklisting is Kraken.
What is Tornado Cash?
Tornado Cash is a decentralized mixer protocol (smart contract) launched in 2019. It is used to carry out private transactions on Ethereum. The platform accepts mixes, and pools cryptocurrency from different senders to ensure maximum privacy and obscure audit trail. These crypto mixers combine multiple streams of transactions to hide the funds’ origin and destination
GitHub Removes Tornado Cash Co-founder
Within hours after the US government blacklisted Tornado Cash, actions were taken against the platform, and all websites and accounts linked to it were removed from the internet.
Microsoft-owned GitHub also deleted the account of one of the co-founders of Tornado Cash, Roman Semenov. GitHub previously hosted code related to the mixer. When checked, the co-founder’s accounts returned a “Page Not Found” error, and emails also bounced back with the following message:
“The email account that you tried to reach is disabled.”
According to a GitHub spokesperson, as per trade laws, they are required to restrict entities/customers declared Specially Designated Nationals (SDNs) or who have been blocked by authorities from using GitHub.
The spokesperson further added that they need to check government sanctions regularly to ensure such entities don’t impact other users. On the other hand, Semenov later tweeted about his account’s blocking on GitHub stating the following:
My @GitHub account was just suspended 🤷
— Roman Semenov 🌪️ 🇺🇦 (@semenov_roman_) August 8, 2022
Is writing an open source code illegal now?
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