US Treasury Lifts OFAC Sanctions on Tornado Cash: What It Means for Crypto Users
US Treasury Lifts Sanctions on Tornado Cash
The U.S. Department of the Treasury has officially removed Tornado Cash, the Ethereum-based privacy mixer, from its sanctions list, a decision influenced by recent legal battles and administrative issues.
“Following our analysis of the unique legal and policy challenges raised by the use of financial sanctions in the context of developing technologies and legal frameworks, we’ve opted to rescind the economic sanctions against Tornado Cash,” the Treasury Department announced.
A Brief History of Tornado Cash
Established in 2019, Tornado Cash was designed as a decentralized protocol aimed at enhancing the privacy of transactions conducted on the Ethereum blockchain.
In August 2022, the mixer was incorporated into the Office of Foreign Assets Control (OFAC) sanctions list, which targets specific individuals and organizations. U.S. authorities alleged that Tornado Cash was involved in laundering over $7 billion, including funds linked to North Korea’s Lazarus Group.
This resulted in a prohibition against U.S. citizens using the service and led to legal proceedings against its co-founders, Roman Storm and Roman Semenov, who faced indictments in 2023 for their roles in laundering over $1 billion in transactions.
In response, six users of Tornado Cash, supported by Coinbase, filed a lawsuit against the Treasury, contesting the sanctions.
A federal court in Texas ruled in January 2025 that smart contracts themselves could not be subjected to sanctions, a ruling that was later affirmed by the Fifth Circuit in November 2024.
As of today, the Treasury has formally removed the sanctions, referencing the changing legal frameworks and technologies while expressing ongoing concerns about illicit cryptocurrency activities and reaffirming its commitment to maintaining sanctions against the DPRK.
Ongoing Concerns
Despite this development, the Treasury reiterated its commitment to enforcing sanctions against the Democratic People’s Republic of Korea (DPRK), a persistent source of geopolitical instability, especially in light of the recent hacking incident involving Bybit, which is believed to have been executed by Lazarus, a group with alleged DPRK affiliations.
“We are profoundly concerned about the substantial state-sponsored hacking and money laundering campaigns aimed at stealing, acquiring, and exploiting digital assets for the benefit of the Democratic People’s Republic of Korea and the Kim regime,” stated the agency.
The agency vowed to carefully monitor any transactions that could aid malicious cyber actors or the DPRK, urging U.S. citizens to exercise caution when considering transactions that might carry such risks.
While this lifted sanction may signal positive news for developers of privacy-focused financial software, the broader implications for the Bitcoin and cryptocurrency landscape remain uncertain, particularly regarding potential impacts on forthcoming legal cases, such as those involving the Samurai Wallet developers.
“The digital assets sector holds tremendous prospects for innovation and value creation for the American public,” remarked Secretary of the Treasury Scott Bessent. “Safeguarding the digital asset ecosystem from exploitation by North Korea and other illegitimate entities is crucial for establishing U.S. leadership and ensuring that Americans can reap the benefits of financial innovation and inclusion.”
This article US Treasury Lifts Sanctions on Tornado Cash initially appeared on Bitcoin Magazine and was authored by Juan Galt.
The post US Treasury Lifts OFAC Sanctions on Tornado Cash: What It Means for Crypto Users appeared first on Crypto Breaking News.
Filed under: News - @ March 21, 2025 8:27 pm