The United States changes the grounds for sanctioning the virtual currency service Tornado Cash
WASHINGTON (Reuters) – The U.S. Treasury has broadened its justification for sanctioning virtual currency mixing service Tornado Cash over allegations that it supports North Korea, despite user criticism that the Treasury is targeting a service and not a organization.
In a press release, the Treasury said its Office of Foreign Assets Control had “simultaneously delisted and renamed” the service, changing its rationale from the claim that it supported North Korean hackers to the claim that which he supported the North Korean regime more generally.
The move — which a Treasury official said reflected the service’s support for the North Korean government — still bars Americans from sending and receiving money through the service.
The Tornado Cash ban was first imposed in August on the grounds that the Ethereum coin-mixing service – which can and has been used to mask cybercrime proceeds – was being used by hackers such as the notorious North Korean group Lazarus to launder stolen funds. .
But that move had proved controversial in part because some argued that Tornado Cash was less an organization and more a software bundle. In a lawsuit filed this year, six Texas Tornado Cash users said Treasury officials exceeded their jurisdiction by effectively blocking access to the computer code.
“Tornado Cash is not a person, entity, or organization. It is a decentralized open-source software project that restores some privacy for Ethereum users,” the lawsuit said.
Cryptocurrency trading platform Coinbase backed the lawsuit, saying in a blog post that the government had gone too far “by sanctioning entire technology instead of specific individuals.”
What impact the new designation might have on the trial, if any, was not immediately clear.
The Treasury also announced sanctions against two employees of North Korean state airline Air Koryo.
(Reporting by Raphael Satter; Editing by Josie Kao)