The Treasury lifted sanctions on Tornado Cash, an Ethereum-based smart contract mixer, following a series of legal defeats and administrative challenges.
“Based on a government review of novel legal and policy issues raised by the use of financial sanctions on financial and commercial activities occurring within the evolving technology and legal environment, we exercised our discretion to remove economic sanctions on tornado cash reflected in the Treasury’s Van Loon v. Treasury’s Monday declaration.”
A quick overview of Tornado Cash Story
Tornado Cash was launched in 2019 as a decentralized protocol to enhance trading privacy in Ethereum.
In August 2022, the mixer was added to the Foreign Asset Management (OFAC) List (OFAC) list, including licensed individuals and entities. US law enforcement alleged that tornado cash has facilitated more than $7 billion in money laundering, including funds related to North Korea’s Lazarus Group.
This banned Americans using co-founders’ services and legal measures against Roman Storm and Rome Semenov.
Six Tornado Cash users, supported by Coinbase, sued the Ministry of Finance and challenged sanctions.
A Federal Court for Texas ruled in January 2025 that smart contracts could not be approved. We determined this was a decision endorsed by the Fifth Circuit in November 2024.
Today, the Treasury has raised concerns about continuing illegal cryptographic activity, citing evolving legal and technical considerations, and has strengthened its intention and authority to continue DPRK sanctions, but has officially lifted the sanctions.
The tension continues
Nevertheless, the Ministry of Finance has strengthened its intention to enforce sanctions against the Democratic Republic of Korea (DPRK). This is an ongoing source of geopolitical tensions, considering the recent over $1 billion hacks from BYBit, claimed to have been carried out by Lazarous, a hacking group with a DRKP tie.
“I am deeply concerned about important state-sponsored hacking and money laundering campaigns aimed at stealing, acquiring and deploying digital assets of the South Korean Democratic Republic (DPRK) and the Kim administration,” the agency said.
“The Treasury will continue to monitor transactions that may benefit malicious cyber actors and DPRKs. People in the US should pay attention before engaging in transactions that present such risks.”
While lifted sanctions appear to be good news for financial privacy software developers, it is too early to know what this means for the bitcoin and the crypto industry in general, or whether it will affect future litigation against Samurai Wallet developers.
“Digital assets present vast opportunities for innovation and value creation for the American people,” said Treasury Secretary Scott Bescent. “Securing the digital asset industry from abuse by North Korea and other illegal actors is essential to establishing US leadership and ensuring that Americans can benefit from financial innovation and inclusion.”
