Tornado Cash, a cryptocurrency exchange, says it is blocking crypto wallets sanctioned by the US Office of Foreign Assets Control(OFAC) using a technique created by compliance firm Chainalysis.
However, one of the protocol’s inventors later stated that the blockage only affects the user-facing decentralised application (dapp), not the underlying smart contract.
The coin mixer, which purports to protect people’s financial privacy, is frequently used to disguise the trail of cryptocurrency stolen through hacking.
Tornado Cash compiles crypto wallets
Tornado Cash, according to a former DEA agent, conforms with OFAC’s list of sanctioned crypto wallets. The announcement comes after U.S. officials said on Thursday that North Korean cybercriminals were behind the $625 million Ronin blockchain attack by Axie Infinity.
According to tracking service Elliptic, the Ronin hackers have “sent $80.3 million worth of ETH using Tornado Cash.”
About OFAC
OFAC is a federal agency of the U.S. tasked with imposing economic sanctions in support of national security and foreign policy. It keeps track of crypto wallets linked to sanctioned people and businesses.
The Chainalysis oracle for sanctions compliance is a free smart contract that searches for crypto wallets that have been sanctioned by different countries. The sanctions-screening mechanism was established in response to Russia’s invasion of Ukraine.
“The time has come for the bitcoin sector to demonstrate how its inherent openness renders it a powerful deterrent to sanction evasion,” said Chainalysis CEO Michael Gronager.
