09 Nov 2022 · 2 min read

US Treasury Redesignates Sanctions on Tornado Cash Crypto Mixer, Citing North Korea Involvement

Source: AdobeStock / Minerva Studio

The US Treasury Department has redesignated sanctions on the mixing service Tornado Cash, saying North Korea’s Lazarus Group has used the service to launder more than $100m stolen in crypto heists.

The new sanctions were published by the Treasury Department’s Office of Foreign Assets Control (OFAC), and ties Tornado Cash to laundering of $96m stolen in the Harmony Bridge Heist in June 2022, and at least $7.8m stolen in the so-called Nomad Heist in August 2022.

“This action is part of the United States’ ongoing efforts to limit the DPRK’s ability to advance its unlawful weapons of mass destruction (WMD) and ballistic missile programs […] which are in clear violation of multiple United Nations (UN) Security Council resolutions,” an announcement from the Treasury issued on Tuesday said.

OFAC first sanctioned Tornado Cash in August this year, when it said the mixing service “has repeatedly failed to impose effective controls designed to stop it from laundering funds for malicious cyber actors.”

The Treasury added in its announcement at the time that it will “continue to aggressively pursue actions against mixers that launder virtual currency for criminals and those who assist them.”

The latest redesignation adds to that by linking Tornado Cash directly to North Korean government activities, including the development of ballistic missiles and nuclear weapons. Among other things, the Treasury Department now claims the mixing service has helped North Korea launder money in support of its weapons of mass destruction (WMD) program.

In addition to Tornado Cash, the latest sanctions from OFAC also targeted North Korean state-owned airliner Air Koryo, as well as two individuals said to be engaged in illegal transfers of missile equipment from China to North Korea.

“Today’s sanctions action targets two key nodes of [North Korea’s] weapons programs: its increasing reliance on illicit activities, including cybercrime, to generate revenue, and its ability to procure and transport goods in support of weapons of mass destruction and ballistic missile programs,” Under Secretary of the Treasury for Terrorism and Financial Intelligence, Brian E. Nelson, said in a comment.

Following the original sanctioning of Tornado Cash, a large number of prominent figures in the crypto community had coins sent to them through the mixer involuntarily, potentially putting them in breach of the sanctions.

Additionally, many in the crypto community, including Ethereum (ETH) co-founder Vitalik Buterin, have admitted to using Tornado Cash for completely legitimate purposes: