U.S. Government Lifts Sanctions on Tornado Cash

Tornado Cash faced multiple sanctions over accusations of facilitating money laundering for the Lazarus Group.

Key Points:

• The U.S. Treasury Department’s sanctions authority has lifted restrictions on Tornado Cash, a crypto mixing service, following a federal appeals court ruling that overturned previous sanctions.
• More than 100 Ethereum (ETH) addresses are also being removed from the Specially Designated Nationals (SDN) list, which serves as the Treasury’s global blacklist.
• Despite the sanctions removal, Roman Storm, a co-founder of Tornado Cash, still faces a criminal trial in July for his alleged involvement in developing the platform’s smart contracts and protocols.

On Friday, the U.S. Treasury Department’s sanctions watchdog officially removed Tornado Cash from its global blacklist.

The crypto mixing service had previously been accused of aiding North Korea’s Lazarus Group in laundering stolen funds from various cyberattacks. As a result, the Office of Foreign Assets Control (OFAC) imposed multiple sanctions, prohibiting U.S. individuals and businesses from financially engaging with the platform.

However, a federal appeals court ruling in November determined that OFAC could not sanction Tornado Cash’s smart contracts, as they did not constitute the “property” of a foreign national—leading to the decision to lift the restrictions.

In a press release, the U.S. Treasury Department stated, "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."

Another Office of Foreign Assets Control (OFAC) release details the removal of over 100 Ethereum (ETH) addresses from the Specially Designated Nationals (SDN) list, the blacklist maintained by the U.S. Treasury.

Roman Storm, a co-founder of Tornado Cash, is still set to stand trial this July over allegations related to his role in developing the protocol's smart contracts. Another developer was also charged but remains at large. Following the Fifth Circuit Court’s ruling in November, Storm’s legal team requested a reconsideration of the court’s earlier decision to deny dismissal of charges against him. However, in February, Judge Katherine Polk Failla of the Southern District of New York (SDNY) rejected the motion, asserting that Tornado Cash’s sanction status did not impact the alleged violations of sanctions related to the Lazarus Group.

Storm’s attorney, Brian Klein of Waymaker LLP, welcomed the removal of sanctions against Tornado Cash, stating, "Now the SDNY prosecutors should similarly reconsider their unfortunate decision to charge our client and dismiss their case against him."

In a statement, Treasury Secretary Scott Bessent emphasized the need to "secure the digital asset industry from abuse by North Korea and other illicit actors."

A Monday court filing, referenced in the Treasury's statement, indicated that the U.S. government might not completely remove sanctions related to Tornado Cash.

The court filing stated that "vacating the designation of Tornado Cash in its entirety could have significantly 'disruptive consequences' for national security and law enforcement."

Following the Treasury’s statement, the TORN token surged 40% within minutes.