The US Department of Treasury placed sanctions on 08 August 2022 regarding Tornado Cash, a leading "crypto mixer" for transactions in virtual currency that US officials describe as a hub for laundering stolen funds, including by North Korean hackers. The Treasury Department reported Tornado Cash had been used to transfer at least $96 million of funds stolen in June from crypto exchange service Harmony Bridge and another $7.8 million of the nearly $200 million in cryptocurrency hacked from Nomad, a similar service. In addition, Tornado Cash was used to transfer and mask $455 million of the more than $600 million worth of Ethereum, a leading virtual currency, stolen in April from the Axie Infinity game via the Ronin Network.[1]
That theft, which the Treasury Department called the largest known crypto heist to date, was carried out by North Korean state-backed hacking units known as the Lazarus Group and APT38, according to the US Federal Bureau of Investigation (FBI).
See: https://redskyalliance.org/xindustry/lazarus-targeting-cryptocurrency
Tornado Cash is one of the leading mixers, also known as tumblers, which help people hide the movements of their cryptocurrencies like bitcoin and Ethereum by blending them with the transfers by other users. Tornado Cash "has been used to launder more than $7 billion worth of virtual currency since its creation in 2019," the Treasury Department spokesman said. In May 2022, the Treasury sanctioned another large crypto mixer, Blender[.]io, which it said was also used to process crypto funds stolen by the North Korean groups. US officials say the mixer services are not themselves illegal but are frequently used to move illicit funds and that other mixers and anonymity-enhancing technologies in the crypto ecosystem are under scrutiny.
The sanctions prohibit US individuals or firms from using Tornado Cash and would risk losing those funds if they did. On its official sanctions blacklist, the US Treasury listed dozens of Tornado Cash-related URLs and Ethereum contract addresses but no individual or corporate entity, usually comprising sanctions.
Roman Semenov, the Russian founder of Tornado Cash, suggested in a Twitter statement that his company cannot screen who uses the service. Tornado Cash is built on the use of automated "smart contracts" between anonymous trading parties, and the operations of those contracts are decentralized through the Ethereum blockchain. "Tornado Cash community tries its best to make sure good actors can use it by providing compliance tools," Semenov wrote. "Unfortunately, it's technically impossible to block anyone from using the smart contract on the blockchain."
Coin Center https://www.coincenter[.]org - a Washington-based group that lobbies for the cryptocurrency industry, criticized the Treasury's approach. "A smart contract is a robot, not a person. It is software that resides on the Ethereum blockchain," Coin Center executive director Jerry Brito and research director Peter Van Valkenburgh said in a statement. The Treasury Department was not sanctioning a "bad actor" but "a tool that is neutral in character, and that can be put to good or bad uses like any other technology.”
One of the biggest cons of investing in Bitcoin is its volatility (subjectively, though, plenty would disagree). As Bitcoin is a scarce asset, its value is influenced tremendously by demand and supply principles and market sentiment. This makes Bitcoin highly unpredictable and volatile, hence risky.
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[1] https://www.securityweek.com/us-sanctions-crypto-laundering-service-tornado
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