The U.S. Treasury Department removed sanctions against Tornado Cash after a recent appellate court ruling. The cryptocurrency mixer, which was accused of laundering funds for North Korea’s Lazarus Group, had been added to the U.S. sanctions list in 2022. However, a federal appeals court ruled in November 2024 that the Treasury had exceeded its authority, as the mixer’s immutable smart contracts could not be considered property under U.S. law. This led to the removal of Tornado Cash from the Specially Designated Nationals (SDN) list.
Tornado Cash was accused of laundering over $7 billion in stolen cryptocurrency since its inception in 2019. The Treasury Department had previously cited the mixer as a tool used by the Lazarus Group for illicit activities, including laundering over $455 million from the Axie Infinity hack. In response to the court’s decision, federal prosecutors indicated that they would take the ruling into account in their ongoing legal proceedings. Despite this, the Treasury emphasized its commitment to disrupting North Korean cybercrime.
The decision to remove the sanctions reflects a shift in the U.S. government’s stance on cryptocurrency technology.
The Treasury stated that while it remains focused on preventing the abuse of digital assets by malicious actors, it also recognizes the potential for innovation in the space. Treasury Secretary Scott Bessent acknowledged the need to secure the digital asset industry, ensuring that the U.S. leads in financial innovation while protecting the system from exploitation by bad actors.
Even with the sanctions lifted, Tornado Cash’s role in laundering stolen funds has continued to raise concerns. Although the sanctions were removed, some researchers still find evidence that North Korean hackers use the service to launder billions of dollars in cryptocurrency annually. The legal battles surrounding Tornado Cash, including charges against its founders, highlight ongoing issues in the regulation of digital currencies and the fight against cybercrime.
Reference:
