Treasury Delists Tornado Cash, Reversing Sanctions After Court Ruling

The United States Treasury Department has officially removed Tornado Cash from its sanctions list, marking a significant shift in the regulatory stance towards cryptocurrency mixing tools. This decision comes after a federal appeals court reversed a previous ruling, determining that the Treasury had exceeded its authority in imposing sanctions on the platform. The delisting was announced by the Treasury Department's Office of Foreign Assets Control (OFAC) on March 21, 2025, and follows a review by the current administration.

Tornado Cash, a cryptocurrency mixing tool, has been under scrutiny for its alleged involvement in facilitating money laundering activities, particularly those linked to the Lazarus Group, a North Korean hacking entity. The Lazarus Group has been accused of high-profile thefts, including a $1.4 billion heist from the cryptocurrency exchange Bybit. Despite these concerns, the current administration has maintained its commitment to combating money laundering campaigns while also seeking to balance regulatory oversight with the promotion of cryptocurrency innovation.

The delisting of Tornado Cash is part of a broader effort by the Trump administration to position the United States as a global leader in the cryptocurrency industry. This move aligns with the administration's goal of fostering a fair and transparent regulatory environment for digital assets. The Treasury Department's decision to lift sanctions on Tornado Cash reflects a nuanced approach to regulating cryptocurrency, acknowledging the need for privacy tools while addressing the risks associated with illicit activities.

The Treasury Department emphasized its ongoing commitment to enforcing sanctions against the Democratic People’s Republic of Korea (DPRK) to constrain the regime's ability to fund its weapons of mass destruction and ballistic missile programs. This commitment underscores the administration's dual focus on promoting cryptocurrency innovation while safeguarding against the misuse of digital assets for malicious purposes.

The delisting of Tornado Cash from the global blacklist signifies a victory for privacy advocates within the cryptocurrency community. However, it also highlights the ongoing legal and regulatory challenges that shape the future of crypto privacy. As the cryptocurrency landscape continues to evolve, the balance between privacy and regulatory oversight will remain a critical issue for policymakers and industry stakeholders alike.

Over 100 Ethereum addresses are also being removed from the Specially Designated Nationals List, used by the Treasury to maintain its blacklist. Despite lifting the sanctions on Tornado Cash, Roman Storm, one of the founders of the mixing service, will still face a criminal trial in July over his alleged role in developing the smart contracts and protocols. Another developer has also been charged but is yet to be arrested.

Following the November ruling, Storm’s lawyers have filed a motion for the court to reconsider its earlier decision to deny the dismissal of charges against him. The motion was dismissed in February when Judge Katherine Polk Failla of the Southern District of New York stated that “whether or not Tornado Cash itself was subject to sanctions does not affect the sanctions Defendant allegedly conspired to violate.” Meanwhile, Storm’s lawyer said he was pleased to see the sanctions against Tornado Cash removed, adding, “Now, the SDNY prosecutors must similarly reconsider their unfortunate decision to charge our client and dismiss the case against him.”