Treasury Lifts Tornado Cash Sanctions After Court Ruling

The U.S. Department of the Treasury has announced the removal of economic sanctions against Tornado Cash, a cryptocurrency mixer that was previously accused of facilitating the laundering of funds stolen by North Korean hackers. The decision comes after a thorough review of the legal and policy implications surrounding the use of financial sanctions in the context of evolving technology and legal landscapes. The Treasury's Office of Foreign Assets Control (OFAC) had initially blacklisted Tornado Cash in August 2022, citing its involvement in laundering over $7 billion worth of virtual currency since its inception in 2019.

The Treasury Department's decision to lift the sanctions was influenced by a recent court ruling that addressed the definition of property in the context of digital assets. This ruling played a significant role in the administration's review process, leading to the conclusion that the sanctions on Tornado Cash were no longer justified. The removal of Tornado Cash from the Specially Designated Nationals (SDN) blacklist means that the platform and its associated addresses are no longer subject to U.S. economic sanctions. However, it is important to note that the sanctions on the founder of Tornado Cash remain in place.

Secretary of the Treasury Scott Bessent emphasized the importance of securing the digital asset industry from abuse by illicit actors, stating that "digital assets present enormous opportunities for innovation and value creation for the American people." The Treasury's decision to remove the sanctions against Tornado Cash is seen as a step towards establishing U.S. leadership in the digital asset industry and ensuring that the American people can benefit from financial innovation and inclusion. The move also highlights the Treasury's commitment to adapting its policies to the rapidly evolving technological landscape, while maintaining its focus on combating illicit activities.

Tornado Cash is a “crypto mixer” that uses cryptographic smart contracts and zero-knowledge proofs to obscure digital asset transaction trails. It has been criticized for facilitating bad actors, such as North Korea’s Lazarus Group, which uses Tornado Cash to wash stolen funds headed for nuclear development. The move comes two months after a New Orleans-based U.S. Court of Appeals for the Fifth Circuit lifted sanctions against the controversial protocol. The Department of the Treasury officially filed with the courts on Monday to remove Tornado Cash from the US sanctions list. Now, the Tornado Cash Ethereum address has officially been removed.