US Treasury Removes Sanctions on Ethereum Mixer Tornado Cash

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Journalist

Tanzeel Akhtar

Journalist

Tanzeel Akhtar

About Author

Tanzeel Akhtar has been covering the cryptocurrency and blockchain sector since 2015. She has written for the Wall Street Journal, Bloomberg, CoinDesk, Bitcoin Magazine and Bitcoin.com.

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Key Takeaways:

  • The U.S. Treasury has lifted economic sanctions on Ethereum mixer Tornado Cash.
  • The decision follows a review of how financial sanctions apply to decentralized platforms, reversing the Treasury’s 2022 blacklisting of Tornado Cash.
  • Treasury said it remains focused on combating state-sponsored cybercrime, particularly money laundering linked to North Korea’s weapons programs.

The U.S. Treasury has officially removed economic sanctions on Ethereum-based transaction mixer Tornado Cash, citing a reassessment of legal and policy issues related to digital financial activities.

In a press release the U.S. Treasury said, in a Monday court filing for Van Loon v. Department of the Treasury, officials stated that evolving technology and financial frameworks required a reconsideration of how sanctions are applied to decentralized platforms.

This marks a reversal of the Treasury’s 2022 decision, which initially blacklisted Tornado Cash due to concerns over its use in illicit activities.

Despite lifting sanctions, the Treasury said its continued vigilance against cybercrime, particularly state-sponsored hacking and money laundering linked to the Democratic People’s Republic of Korea (DPRK).

Officials reaffirmed their commitment to disrupting the ability of North Korean actors to exploit digital assets for funding weapons programs. The agency also warned U.S. persons to exercise caution when engaging with financial tools that could facilitate illicit transactions.

“Digital assets present enormous opportunities for innovation and value creation for the American people,” said Treasury Secretary 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,” adds Bessent.

Sanctions First Imposed in 2022 After North Korean Hack

The Treasury Department’s Office of Foreign Assets Control (OFAC) first sanctioned Tornado Cash in August 2022 when it said the mixing service “has repeatedly failed to impose effective controls designed to stop it from laundering funds for malicious cyber actors.”

On Tuesday, Coinbase’s Chief Legal Officer Paul Grewal criticized the U.S. Treasury Department for disregarding a Fifth Circuit ruling requiring Tornado Cash’s removal from the sanctions list, citing the government’s incorrect application of sanctions laws to immutable smart contracts.

Grewal’s remarks, posted on X, come in response to the government’s handling of a recent Fifth Circuit decision, which found that Tornado Cash’s immutable smart contracts do not qualify as property under U.S. sanctions laws.