Why is tornado cash banned?

Tornado Cash banned over money laundering but has legitimate uses as privacy tool. The US Treasury Department blacklisted the virtual currency mixer Tornado Cash on Monday, saying the system "has been used to launder more than $7 billion worth of virtual currency since its creation in 2019."

Is tornado cash a threat to US National Security?

In a statement, the Office of Foreign Assets Control (OFAC), a Treasury Dept. agency, called Tornado Cash “a significant threat to the national security” of the United States, and alleged that it has been used repeatedly by North Korean hackers to launder money from multiple million-dollar thefts.

How does tornado cash work?

The Treasury Department said Tornado Cash "indiscriminately facilitates anonymous transactions by obfuscating their origin, destination, and counterparties, with no attempt to determine their origin. Tornado receives a variety of transactions and mixes them together before transmitting them to their individual recipients.