The U.S. Department of the Treasury recently announced the lifting of sanctions on Tornado Cash, the Ethereum-based smart contract mixer, which follows a series of setbacks in court and challenges on the administrative front.
“The Administration, after carefully reviewing the complex legal and policy questions linked to imposing financial sanctions on activities in the rapidly evolving tech and legal landscapes, has decided to lift the economic sanctions on Tornado Cash. This decision is reflected in our filing on Monday in the case of Van Loon v. Department of the Treasury,” explained the Treasury Department.
### A Recap of the Tornado Cash Journey
Tornado Cash made its debut in 2019 as a decentralized protocol aimed at bolstering transaction privacy on Ethereum. However, in August 2022, the Office of Foreign Assets Control (OFAC) blacklisted the mixer, alleging it played a role in laundering over $7 billion, some of which reportedly had ties to North Korea’s infamous Lazarus Group. This move effectively barred U.S. citizens from using the service, and legal proceedings followed against its co-founders, Roman Storm and Roman Semenov, who faced charges in 2023 for money laundering activities exceeding $1 billion.
The sanctions faced backlash, leading to a lawsuit supported by Coinbase, wherein six users of Tornado Cash challenged the Treasury. A turning point came in January 2025 when a federal court in Texas ruled that smart contracts could not be sanctioned. This decision was affirmed by the Fifth Circuit in November 2024. In light of these developments, the Treasury officially rescinded the sanctions, though they reiterated concerns over ongoing illicit crypto activities and emphasized their continued commitment to DPRK-related sanctions.
### Ongoing Concerns Amid Easing Sanctions
Despite the removal of sanctions on Tornado Cash, the Treasury was clear about continuing its enforcement against North Korea, highlighting its involvement in a recent $1 billion hack of Bybit alleged to be orchestrated by the North Korean-linked Lazarus hacking group.
“We remain resolutely focused on the extensive state-backed hacking and laundering operations seeking to exploit digital assets for the benefit of the Kim regime and North Korea,” the agency stated.
Furthermore, the Treasury emphasized its vigilance. “We will keep a close watch on any transactions potentially aiding malicious cyber actors or benefiting the DPRK, and urge U.S. individuals to approach such transactions with caution.”
While the lifting of sanctions seems a positive development for privacy-enhancing financial technologies, its broader implications for the crypto industry, including impacts on cases like those involving the Samurai Wallet developers, remain uncertain.
“Digital assets offer tremendous potential for innovation and wealth creation for Americans,” remarked Treasury Secretary Scott Bessent. “It is crucial to protect the digital asset sector from exploitation by North Korea and other illicit players to assert U.S. leadership in the field and ensure that Americans reap the benefits of financial innovation and inclusivity.”
