Original source: U.S. Treasury Department, Reuters, etc.

background

background

On August 8, 2022, the official website of the Office of Foreign Assets Control of the US Department of the Treasury (the Office of Foreign Assets Control of the US Department of the Treasury) (OFAC) showed that it will partly link with the Tornado Cash agreement or related Ethereum address to interact with,image description

Source: U.S. Department of the Treasury

Here is an explanation of this SDN List: What is the US Specially Designated Nationals List? If they are added to this list, the persons on the list will be subject to the various sanctions programs administered by OFAC, and the property and property rights of individuals or related entities will be frozen.

How to sanction?

References:

References:

http://www.jcacherm.com/portal/article/index/id/6/cid/4.html

What is OFAC?

OFAC's mission is to manage and implement all economic and trade sanctions based on US national security and foreign policy, including financial sanctions against all terrorism, transnational drug and narcotics transactions, and proliferation of weapons of mass destruction. The current OFAC It remains the most important U.S. government department for economic and trade sanctions against specific countries, regions, and individuals. In recent years, with the deepening of the worldwide anti-corruption and anti-money laundering campaign, OFAC's policies and instructions have become operating principles that cannot be ignored by the world's financial industry, especially the United States and financial institutions that are closely related to the US financial industry.

What are the possible reasons?

In fact, in May 2022, the U.S. Department of the Treasury sanctioned Blender, another currency mixing service, on the grounds that it was suspected of helping a certain country’s official hacker organization (mainly referring to the Lazarus Group here) to cleanse part of the funds stolen from Axie Infinity.

On March 23, 2022, the FBI identified the intrusion into Ronin. The illegal hacker organization is the Lazarus Group, and Tornado Cash is often used in many crimes.

As of early May 2022 (at the time of pricing), Lazarus Group has transferred 37,000 ETH, approximately $100 million, to Tornado Cash. Some experts believe that Tornado Cash currently has a balance of 172,000 Ethereum. Around May, the black money of an official hacker in a certain country accounted for 20% of the balance held by the Tornado Cash smart contract.

But there is no feasible way to prevent Lazarus Group from adding black money to it. Although the Tornado Cash operator has also tried a lot of efforts, it cannot restrict money laundering, nor can it prevent some criminals from depositing and withdrawing money.

According to legal expert Nicholas Weaver, on April 19, 2022, 18,256 Ethereum (approximately $50 million) were obtained in the Lazarus Group wallet. On April 28 and 29, the ETH was transferred to Tornado Cash, and 12 days after OFAC issued the sanctions, Tornado Cash accepted the ETH from the hack. So OFAC began to consider sanctions against Tornado Cash, specifically proposed that the wallet itself should be listed as a sanctioned entity, thinking that everyone else involved in this fund pool was helping to hide some black money, which may have been OFAC Beginning of planned action against Tornado Cash...

【references】

【references】

1.https://www.lawfareblog.com/ofac-dprk-and-tornado-cash

2.https://u.today/breaking-ethereum-based-mixer-tornado-cash-sanctioned-by-us-government

3.http://www.jcacherm.com/portal/article/index/id/6/cid/4.html

4.https://baike.baidu.com/item/ofac/6228015?fr=aladdin