The widely used crypto-mixing protocol has been implicated in numerous DeFi exploits in the past.
Chainalysis oracle contracts are being used to block wallet addresses sanctioned by the Office of Foreign Assets Control (OFAC) on Friday, Tornado Cash announced in a blog post. This comes after the recent $600 million+ (R8 bn+) Ronin Bridge exploit, which the U.S. Department of the Treasury has linked to North Korean cybercriminal Lazarus Group. According to Elliptic, a blockchain analytics firm, the hackers have sent about $80.3 million (R 1.1bn) in Ether (ETH) through Tornado Cash. It’s important to keep our money private, but it shouldn’t come at the expense of non-compliance, says the Tornado Cash team.
Tornado Cash is a well-known cryptocurrency mixture that is used to cover up the trail of transactions in order to maintain privacy. The Chainalysis Sanctions Oracle can determine whether a cryptocurrency wallet address has been included in a US, European Union, or United Nations sanctions designation.
Tornado Cash has been linked to a number of high-profile decentralized finance scandals. During the $375 million (R5.5bn) Wormhole hack, hackers used stolen funds to test Tornado Cash. The LooksRare team also used Tornado Cash to withdraw over $30 million (R440 mil) in cryptocurrency in the same month. Hackers used Tornado Cash to transfer $800,000 (R12 mil) in nonfungible tokens (NFTs) from a recent Rare Bears Discord phishing attack. The DApp has also been implicated in the laundering of $33 million (R480 mil) from a Crypto.com hack.
But Semenov appears to have had enough of the protocol’s association with alleged illicit activities, discussing the possible consequences of noncompliance with regulators in blocking access to blacklisted individuals, which could lead to jail time.