Tornado Cash Sanction By U.S. Treasury Has Another Twist

In Brief

• The U.S. Treasury has updated its sanctions against the coin mixer, Tornado Cash.
• The number of unique users on Tornado Cash has hit notable lows following sanctions by the U.S. Treasury.
• Coin Center's director of research, "Nothing they've announced changes our strategy in this lawsuit."

Troubled cryptocurrency mixer, Tornado Cash problems keeps going from bad to worse. The U.S Treasury now has amended sanctions highlighting its role in North Korea’s nuclear weapons program.

The United States Treasury Department’s Office of Foreign Asset Control, or OFAC Nov. 8, updated the sanctions on Tornado Cash. The official press release, ‘Treasury Designates DPRK Weapons Representatives,’ highlighted this development.

It also named two individuals involved in “transportation and procurement activities” for the Democratic People’s Republic of Korea in the Specially Designated Nationals list and Blocked Persons (SDN).

Tornado Cash in deep waters
The U..S Treasury’s OFAC has “delisted and simultaneously redesignated” Tornado Cash in addition to taking into account activities conducted by North Korean nationals Ri Sok and Yan Zhiyong in its basis for sanctions.

This update comes after the original sanction was first put forth in August under the umbrella of cybercrime. But now, OFAC redesignated the crypto mixer in an effort to fight North Korea’s WMD programs ‘to limit the DPRK’s ability to advance its unlawful weapons of mass destruction and ballistic missile programs.

Further, the re-designation “includes an additional basis for the designation of Tornado Cash regarding its support for DPRK activities.”

This sanction was first imposed on Tornado Cash over allegations that hackers used it for the movement of illicit funds. Its primary example was North Korea’s notorious Lazarus Group, which has been said to have laundered over $455 million in stolen cryptocurrency from hacks.

Taking no chances
Brian Nelson, Under Secretary of the Treasury for terrorism and financial intelligence, stated:
“Today’s sanctions action targets two key nodes of the DPRK’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.”

Needless to say, this was a major blow to the troubled platform. Data from Dune further shows a significant drop in unique users per week since the announcement of the sanctions in August 2022. October saw its unique users fall to just 40.

As BeInCrypto reported, the sanctions have taken Tornado Cash from all-time highs in terms of unique users to long-term lows.

Fighting back for the crypto community
Despite the obvious fall, the crypto community hasn’t given up yet. Coin Center, with financial backing from Coinbase, remains undeterred in its strategy.

“Nothing they’ve announced changes our strategy in this lawsuit,” said Peter van Valkenburgh, Coin Center’s director of research, in a tweet. “These developments underscore the arbitrary and capricious nature of Treasury’s actions and their continued misunderstanding of the technology.”

Some might also argue that the said sanction actually reveals the need for decentralized tools.

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