The U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) has officially banned the Ethereum-based mixing protocol Tornado Cash and added all associated digital wallet addresses to the Specially Designated Nationals (SDN) list. The move, announced on Monday, prohibits any U.S. person or entity from engaging with the platform, including its websites and related crypto addresses.
Sanctions Details: Addresses and Domains Targeted
OFAC’s designation covers Tornado Cash and Tornado Cash Classic websites, along with dozens of Ethereum addresses that previously held USDC and ETH. The watchdog stated that U.S. individuals and businesses are strictly forbidden from using the mixing service. Violators face civil penalties ranging from $90,000 to $308,000 per violation, plus potential prison time, under sanctions enforcement laws enacted since 2020.
Rationale: Fighting North Korean Cybercrime
OFAC accused Tornado Cash of laundering stolen funds for the infamous Lazarus Group, a North Korean hacking syndicate. The mixer has been used to obfuscate the origins of crypto assets stolen in major hacks, including the Ronin bridge exploit (Axie Infinity) and attacks on DeBridge Finance. The designation follows earlier actions: in April 2022, OFAC added several crypto addresses linked to Lazarus Group to the SDN list. The regulator also highlighted the case of former Ethereum developer Virgil Griffith, sentenced to five years and three months in prison for providing technical advice to North Korea on evading sanctions via crypto.
Market Impact and Community Backlash
Following the ban, Tornado Cash’s native token TORN plummeted over 50%. Major centralized exchanges swiftly halted deposits and withdrawals from addresses linked to the mixer. The crypto community remains divided: privacy advocates argue that banning mixers undermines fundamental decentralization principles, while supporters of regulation claim it is necessary to curb illicit finance. Industry observers expect increased scrutiny on other privacy tools, though no further actions have been announced yet.