The United States Treasury Department has announced today that it has banned American citizens from using Tornado Cash. A famous decentralized crypto-mixing service, in which one of its features so renders crypto tokens untraceable.
Today, the Office of Foreign Assets Control (OFAC), a watchdog agency tasked with preventing sanctions violations; added Tornado Cash to its Specially Designated Nationals list, a running tally of blacklisted people, entities and cryptocurrency addresses.
Due to this addition, all U.S. persons and entities are prohibited from interacting with Tornado Cash or any of the Ethereum wallet addresses tied to the protocol. Those who do may face criminal penalties.
Tornado Cash is a decentralized, non-custodial privacy solution built on Ethereum. It improves transaction privacy by breaking the on-chain link between the recipient and destination addresses.
Tornado Cash uses a smart contract that accepts ETH and ERC-20 deposits. These deposits can be withdraw by any on-chain address. Whenever an asset is withdraw by the new address, there is no way to link the withdrawal to the deposit.