According to the Treasury press release, "OFAC sanctioned virtual currency mixer Tornado Cash, which has been used to launder more than $7 billion worth of virtual currency since its creation in 2019." OFAC administers and enforces economic and trade sanctions based on US foreign policy and national security goals against targeted foreign countries and criminal enterprises that present a threat to the U.S. and its economy. 

In furtherance of that agenda, OFAC administers a number of different sanctions programs. The sanctions can be either comprehensive or selective, using the blocking of assets and trade restrictions to accomplish foreign policy and national security goals. As part of its enforcement efforts, OFAC publishes a list of individuals & companies owned or controlled by, or acting for or on behalf of, targeted countries. It also lists individuals, groups, and entities designated under programs that are not country-specific. In its press release, OFAC states that it previously sanctioned the North Korean government (DPRK) for its role in a $455 million hacking scheme allegedly run by the Lazarus Group--a DPRK state-sponsored hacking organization. Twitter Post - OFAC Sanctions

In 2019, OFAC sanctioned DPRK for its role in the hacking scheme--which is to-date the largest known virtual currency heist ever. OFAC states that Tornado Cash was subsequently used to launder funds from the above DPRK hack--"more than $96 million of malicious cyber actors’ funds derived from the June 24, 2022 Harmony Bridge Heist, and at least $7.8 million from the August 2, 2022 Nomad Heist." “Today, Treasury is sanctioning Tornado Cash, a virtual currency mixer that launders the proceeds of cybercrimes, including those committed against victims in the United States,”“Despite public assurances otherwise, Tornado Cash has repeatedly failed to impose effective controls designed to stop it from laundering funds for malicious cyber actors on a regular basis and without basic measures to address its risks. Treasury will continue to aggressively pursue actions against mixers that launder virtual currency for criminals and those who assist them.” U.S. Treasury Sanctions Notorious Virtual Currency Mixer Tornado Cash

So what's this mean for Tornado Cash and it users? "As a result of today’s action, all property and interests in property of the entity above, Tornado Cash, that is in the United States or in the possession or control of U.S. persons is blocked and must be reported to OFAC" "In addition, any entities that are owned, directly or indirectly, 50 percent or more by one or more blocked persons are also blocked." "All transactions by U.S. persons or within (or transiting) the United States that involve any property or interests in property of designated or otherwise blocked persons are prohibited unless authorized by a general or specific license issued by OFAC, or exempt."OFAC Compliance Guidance