U.S. Government Lifts Sanction on Tornado Cash
Tornado Cash, an Ethereum-based cryptocurrency mixer that had been on the Office of Foreign Assets Control’s (OFAC) blacklist since August 2022, has had its sanctions formally lifted by the u.s. Treasury Department.
This ruling represents a major win for privacy advocates and the larger decentralized finance (DeFi) ecosystem in the world’s largest economy. The Treasury’s move comes after a string of court cases that resulted in decisions for Tornado Cash users.
The protocol was accused of aiding billion-dollar money laundering schemes, mainly by North Korean hackers and other bad actors.
The initial sanctions were met with a robust response from the cryptocurrency community, with many participants claiming that the Treasury had overreached itself by focusing on an open-source protocol.
Coinbase contributed money to the lawsuit, which was filed against the Treasury by several users of the crypto mixer.
Their persistence paid off when the 5th Circuit Court of Appeals overturned the Treasury in late 2024. In January, a federal court in Texas also decided in favor of Tornado Cash users, adding credence to this conclusion.
The U.S. Treasury stressed that it is still “concerned” about state-sponsored hacking and money laundering operations that utilize cryptocurrency systems, even though the sanctions have been lifted. This suggests that authorities continue to watch out for illicit activity in the broader cryptocurrency space even though Tornado Cash is no longer a target.
Treasury Secretary Scott Bessent publicly recognized the “enormous” opportunities that digital assets present to American citizens, signaling a more balanced approach to cryptocurrency regulation
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