Key Takeaways
- The decision to lift the sanctions comes after a legal battle initiated by six Tornado Cash users, with financial backing from Coinbase
- The plaintiffs argued that OFAC had overstepped its authority in blacklisting the platform
The U.S. Treasury Department has lifted sanctions on Tornado Cash, a crypto mixer previously blacklisted for its alleged role in laundering funds. A crypto mixer is used to obscure the origin and destination of the funds, and then redistributes them to new addresses.
Tornado Cash was sanctioned in 2022 by the Treasury’s Office of Foreign Assets Control (OFAC), which claimed that the platform had facilitated money laundering, including more than $455 million allegedly stolen by the North Korean state-backed hacking group Lazarus.
The decision to lift the sanctions comes after a legal battle initiated by six Tornado Cash users, with financial backing from Coinbase. The plaintiffs argued that OFAC had overstepped its authority in blacklisting the platform. In November 2023, a U.S. appeals court ruled that the agency’s actions went beyond its jurisdiction, prompting a review of the designation. The Treasury later confirmed it would rescind the sanctions, citing legal and policy considerations in light of changing financial technologies.
Despite this reversal, the Treasury has kept one of Tornado Cash’s co-founders, Roman Semenov, on the sanctions list. His designation as an enabler of cyber-related crimes was removed, but he remains sanctioned under measures targeting North Korea’s financial activities. The department reaffirmed its concerns over state-sponsored cybercrime, particularly regarding the misuse of digital assets to fund illicit operations.
A Treasury spokesperson reportedly stated, “We remain deeply concerned about the significant state-sponsored hacking and money laundering campaign aimed at stealing, acquiring, and deploying digital assets for the DPRK and the Kim regime.”
The latest development comes amid President Trump warming up to the digital asset industry. Earlier this year, Trump signed an executive order establishing a strategic reserve of cryptocurrencies.
Tornado Cash has been linked to several major cyber thefts, including the laundering of $7.8 million from the August Nomad Heist and over $96 million from the June Harmony Bridge hack.
