​Crackdown on Tornado Cash Was Just Round 1 Decrypting DeFi i | Crypto Sale

​Crackdown on Tornado Cash Was Just Round 1

Decrypting DeFi is Decrypt's DeFi email newsletter.
This week the U.S. government shook the entire crypto world to its core.

The Treasury Department sanctioned the crypto mixer Tornado Cash as well as several crypto wallet addresses associated with the service. That means the protocol and its associated smart contracts are now blacklisted, making them illegal for Americans to use.

Tornado is a privacy tool that lets users obfuscate where their funds have been and where they’re going. Basically, it turns the transparency of blockchain technology into a black box, hiding your crypto activity.

Treasury backed the move by indicating that the Lazarus Group, a hacker group with ties to North Korea, had been using the service to launder stolen crypto (most notably, $96 million the group nabbed from the recent Harmony bridge attack).

In total, the Treasury said that the service “has been used to launder more than $7 billion worth of virtual currency since its creation in 2019.” Not all of that money was technically laundered, though, according to crypto sleuthing company Elliptic.

Roughly $7.6 billion worth of crypto has indeed passed through Tornado, but only $1.5 billion of those funds were illegally obtained (and, thus, laundered), Elliptic said in a report.

Chainalysis, another blockchain monitoring firm, also reported that nearly half of that $7.6 billion sum came from DeFi (none of which, according to Chainalysis, is necessarily illicit).