US Treasury sanctioned Tornado cash for inclusion in N Korean WMD project

    TheMorningCrypto Desk
    TheMorningCrypto Desk
    Published on November 9, 2022 6:09 PM

    Updated on January 9, 2023 12:50 PM

    OFAC also released a new FAQ to give more compliance guidance on the structure of the Tornado Cash organization.
    US Treasury sanctioned Tornado cash for inclusion in N Korean WMD project
    Source: wikipedia

    OFAC to redesignate tornado cash

    The US Treasury Department is "redesignating" Tornado Cash as a sanctioned business, implying that North Korea has exploited the crypto mixing service to finance its WMD development.

    The Treasury Department's Office of Foreign Asset Control (OFAC) announced Tuesday that it would delist and redesignate the privacy tool, which pools transactions to obfuscate senders and recipients, in response to allegations that North Korea used Tornado Cash to launder over $100 million in cryptocurrency to support its WMD program, which includes the development of ballistic missiles. The sanctions monitor initially blocked Tornado Cash in August of this year.

    "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 that threaten regional stability and follows numerous recent DPRK ballistic missile launches, which are in clear violation of multiple United Nations (UN) Security Council resolutions," - A treasury stated.

    Tornado mixer's indulgence in money laundering

    According to reports, the government department repeated the cryptocurrency mixer's participation in laundering $455 million in cryptos seized by the North Korean-based Lazarus Group.

    North Korea recently launched a series of missiles, causing concern in Japan and South Korea as the rockets sailed in their general vicinity. However, no missiles landed.

    In addition to Tornado Cash, OFAC sanctioned North Korea's official flag carrier, Air Koryo, and two people accused of assisting North Korea in transferring missile parts into the country.

    Brian Nelson, Treasury Undersecretary for Terrorism and Financial Intelligence, issued a statement, "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." 

    Tornado cash is a software, claims the crypto community

    Several cryptocurrency community members claim that Tornado Cash and its wallet addresses are software, not people or entities; thus, OFAC should not be allowed to identify the mixer as a sanctioned business.

    This point was raised in lawsuits backed by Coinbase and Coin Center, as well as allegations that the Tornado Cash categorization was unduly broad and harmed Americans with assets locked on the platform. OFAC previously provided instructions for US citizens outlining the steps they might take to recover their cash by applying for a special license.

    Treasury responded to this issue in its revised FAQ, stating that such an entity might be "a partnership, association... or other organization."