Crypto ‘Mixer’ Used by North Korean Hackers Is Slapped With US Sanctions

A popular cryptocurrency service that allows users to mask their transactions was sanctioned by the US Treasury Department based on evidence North Korean hackers relied on it to launder illicit gains, officials announced on Monday.

Tornado Cash, a type of anonymizing virtual currency exchange designed to preserve the privacy of blockchain users, has laundered more than $7 billion in virtual currency, a senior Treasury official said in a press conference. North Korea’s Lazarus Group has laundered $450 million through Tornado Cash, according to the official. It was also used to launder almost $100 million in the June hack of the Harmony Bridge, a platform that allows crypto trading between blockchains, the official said.

Tornado Cash, which was created in 2019, couldn’t immediately be located for comment. Administration officials declined to provide details on where Tornado Cash is based or who is behind it.

The Treasury official described mixers as an automated money-laundering service, used to facilitate anonymous transactions by mixing funds from different sources before transmitting them to the ultimate beneficiary.

Tornado Cash became the second mixer sanctioned by the Treasury Department. In May, the agency issued sanctions against Blender.io, which was also allegedly used by North Korean hackers to launder illicit proceeds from hacking.

Following the sanctions, it appears Blender.io is no longer operating, the official said.

North Korea has been accused of using hacking to steal money to finance Supreme Leader Kim Jong Un’s regime, including to pay for weapons. A senior Biden administration official said there have been seven major hacks of cryptocurrency-related entities since the first of the year.

In an interview in March, one of the founders of Tornado Cash said it was “technically impossible” for sanctions to be enforced against decentralized protocols because of how they are designed.

Designed to preserve privacy, the Tornado protocol works by breaking the link between the sender and receiver’s addresses on transactions sent over the Ethereum blockchain. The project is smart contract-based, meaning that decisions are made by pre-written software programs instead of individuals. It also doesn’t provide any custodian services or have a centralized host for its website.