OFAC re-designates Tornado Cash and designates two individuals under DPRK-related sanctions

On November 8, 2022, the US Department of the Treasury’s Office of Foreign Assets Control designated two employees of Air Koryo, the national flag carrier of the Democratic People’s Republic of Korea (“DPRK”), for engaging in the transportation and procurement goods for the DPRK.  Air Koryo was designated by OFAC in 2016 pursuant to Executive Order 13722, for operating in the DPRK’s transportation industry and transporting parts used in Scud-B missile systems, in violation of a UN prohibition on the export of arms and related material to the DPRK. The new designees, an Air Koryo representative and a logistics manager, were reportedly involved in the transport of electronic parts and other goods from China on behalf of DPRK’s Ministry of Rocket Industry (“MORI”) or the DPRK’s principal intelligence agency, Reconnaissance General Bureau (“RGB”) – entities which were previous designated by the US in 2010 and 2015, respectively.  Both individuals were designated pursuant to EO 13722 for acting or purporting to act on behalf of Air Koryo, a person whose property interests were blocked pursuant to EO 13722 and has ties to DPRK military activities.

After obtaining additional information on the DPRK’s Tornado Cash activities, OFAC also delisted and simultaneously redesignated the entity under two of its sanctions regimes -  EO 13722 and EO 13694, as amended. Tornado Cash, an entity that provides virtual currency mixing services, was allegedly used by the DPRK-controlled Lazarus Group to obfuscate the source of more than $455 million in funds, which the group reportedly stole in March 2022 as part of the largest known virtual currency heist to date. The Lazarus Group was previously designated by OFAC in 2019 as an entity controlled by the RGB. OFAC is now designating Tornado Cash is pursuant to EO 13722 for providing material assistance to the Government of the DPRK, a person who property and interests are blocked pursuant to EO 13722.  OFAC is also redesignating Tornado Cash pursuant to EO 13694, as amended, for providing material assistance in a cyber-enabled activity originating from outside of the US that is reasonably likely to result in a significant threat to national security.

In an effort to reflect Tornado Cash’s redesignation status, OFAC amended three Cyber-related Frequently Asked Questions (FAQs 1076, 1078, and 1079).  OFAC also issued Frequently Asked Question 1095 to clarify the nature of the Tornado Cash entity that is now subject to both EO 13722 and EO 13694 sanctions.  In FAQ 1095, OFAC reiterates that it only designated the entity known as Tornado Cash and describes Tornado Cash’s organizational structure.  OFAC also indicates that the designation, at this time, does not extend to Tornado Cash’s individual founders, developers, DAO members, or users, or other persons who support Tornado Cash.  

Department of Treasury Press Release | Department of Treasury Recent Action | FAQ 1095 | Amended FAQs 1076, 1078, and 1079

 
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