According to the Treasury Department, the Tornado Cash platform has helped criminals launder more than $7 billion of virtual currency.
The U.S. government has been cracking down on the virtual currency industry as lawmakers and regulators grow more concerned about their role in facilitating hacking and other crimes. The platform was made illegal for Americans to send or receive money by the Treasury Department.
Brian Nelson, the under secretary for terrorism and financial intelligence, said in a statement that Tornado Cash has failed to impose effective controls to stop it from being used to laundered funds for cyber criminals.
Criminals use virtual currencies to exchange digital coins for drugs or other illegal goods. Law enforcement officials are able to follow the money when it is recorded on public ledgers.
That kind of tracking is made harder by platforms such as Tornado Cash. Multiple streams of transactions are received and combined to obscure the origin and destination of the money. The Lazarus Group, a group of North Korean-backed hackers, stole more than $450 million in the form of digital currency.
A message was not returned. One of the company's founding fathers did not reply to a request for comment.
The rise of Tornado Cash is due to the fact that it has been used to move stolen Cryptocurrencies. The software protects the privacy of legitimatecryptocurrencies traders who could be targeted by kidnappers or thieves, according to the service's owner.
The Coin Center criticized the Treasury Department for announcing that Tornado Cash is a neutral platform that can be used for good or bad purposes.
It is not a bad actor who is being punished. It is all Americans who would like to use this automated tool to protect their own privacy.
The federal government is cracking down on companies that are lightly regulated. The Commodity Futures Trading Commission fined the stable coin company last year for misstatements about its reserves, while the Justice Department brought charges against a former employee of the largest U.S.cryptocurrencies exchange.
The Treasury Department is looking into the possible violation of U.S. sanctions against the exchange.
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