The Department of Treasury has lifted Sanctions on Tornado Cash, the Ethereum based smart contract mixer, following a series of legal defeats and administrative challenges.
“Based on the Administration’s review of the novel legal and policy issues raised by use of financial sanctions against financial and commercial activity occurring within evolving technology and legal environments, we have exercised our discretion to remove the economic sanctions against Tornado Cash as reflected in Treasury’s Monday filing in Van Loon v. Department of the Treasury,” the Treasury Department stated.
Quick Overview of the Tornado Cash Story
Tornado Cash was launched in 2019 as a decentralized protocol to enhance transaction privacy on Ethereum.
In August 2022, the mixer was added to the Office of Foreign Assets Control (OFAC) list, which includes sanctioned individuals and entities. U.S. law enforcement alleged that Tornado Cash facilitated over $7 billion in money laundering, including funds linked to North Korea’s Lazarus Group.
This led to a ban on U.S. persons using the service and legal action against its co-founders, Roman Storm and Roman Semenov, who were indicted in 2023 for money laundering tied to over $1 billion in transactions.
Six Tornado Cash users, backed by Coinbase, sued the Treasury, challenging the sanctions.
A Texas federal court ruled in January 2025 that the smart contracts couldn’t be sanctioned, a decision upheld by the Fifth Circuit in November 2024.
Today the Treasury officially lifted the sanctions, citing evolving legal and technological considerations, though it expressed concern about ongoing illicit crypto activities and reinforced its intent and authority to continue DPRK sanctions.
Tension Continues
The Treasury nevertheless reinforced its intent to enforce sanctions against Democratic People’s Republic of Korea (DPRK), an ongoing source of geopolitical tension given the recent $1 billion+ hack from Bybit argued to have been executed by Lazarous, a hacking group with DRKP ties.
“We remain deeply concerned about the significant state-sponsored hacking and money laundering campaign aimed at stealing, acquiring, and deploying digital assets for the Democratic People’s Republic of Korea (DPRK) and the Kim regime,” the agency stated.
“Treasury will continue to monitor closely any transactions that may benefit malicious cyber actors or the DPRK, and U.S. persons should exercise caution before engaging in transactions that present such risks.”
Although the lifted sanction appears to be good news for financial privacy software developers, it is too early to tell what this means for the Bitcoin and crypto industry in general, or whether it will have an effect on upcoming court cases like those against the Samurai Wallet developers.
“Digital assets present enormous opportunities for innovation and value creation for the American people,” said Secretary of the Treasury Scott Bessent. “Securing the digital asset industry from abuse by North Korea and other illicit actors is essential to establishing U.S. leadership and ensuring that the American people can benefit from financial innovation and inclusion.”