The US Treasury Department Sanctions Crypto Mixer Tornado Cash
Tornado Cash, a popular crypto mixer known for facilitating anonymous transactions, has lost a lawsuit against the US Treasury Department’s Office of Foreign Assets Control (OFAC) over accusations of money laundering. OFAC claimed that Tornado Cash had laundered over $7 billion of crypto assets since its launch in 2019 and imposed sanctions on its wallets and smart contracts.
Judge Robert Pitman Denies Coinbase-Sponsored Lawsuit
A federal judge, Robert Pitman, denied a motion filed by six individuals, including employees of Coinbase Global, who argued that the OFAC sanction against Tornado Cash affected law-abiding crypto investors. Coinbase, which sponsored the lawsuit, also disagreed with OFAC’s decision to sanction smart contracts, believing it could impact investments in crypto assets. However, Judge Pitman supported OFAC’s determination that smart contracts constitute property within the regulatory definition.
Crypto Research Firm Links Tornado Cash to Hackers
Tornado Cash was sanctioned by OFAC due to its alleged role in facilitating money laundering for hackers supporting foreign terrorists. Several hacking incidents involving the theft of crypto assets have been linked to terrorist groups, and Tornado Cash was accused of making it difficult for authorities to trace stolen digital assets. Chainalysis, a digital-asset research company, reported that North Korean hacking groups stole up to $2 billion of crypto assets in 2022 and often used Tornado Cash to make the funds untraceable.
Hot Take
The US Treasury Department’s sanction against Tornado Cash highlights the ongoing battle between regulators and the crypto industry. While some argue that OFAC exceeded its authority, the federal judge supported the decision, emphasizing the status of smart contracts as property within the regulatory framework. This case raises important questions about the role of anonymity in transactions and the responsibility of platforms in preventing money laundering. It remains to be seen how this ruling will impact the future of crypto mixers and regulatory efforts to combat illicit activities in the crypto space.
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