Complex sentence: This was terrible news for American leaders because whereas before the British were forced to counterfeit money on paper that was similar to the official paper, now they had the authentic paper, and thus distinguishing between real and fake money would be virtually impossible.
Split into simpler sentences: This was terrible news for American leaders: the British had previously been forced to counterfeit money on paper that was similar to the official paper, but now they had the authentic paper. Thus, distinguishing between real and fake money would be virtually impossible.