Trump’s Treasury Removes Sanctions on Crypto’s Favorite Money Laundering Service

The United States Treasury Department announced a shocking move on Friday, lifting sanctions against Tornado Cash, a cryptocurrency protocol designed to obscure ownership over transactions. This decision marks a significant shift in the administration's stance on the controversial service, which was previously sanctioned by the Biden administration due to its alleged use in laundering cryptocurrency stolen from hackers.

Tornado Cash, launched in 2019, was initially intended to provide anonymity for cryptocurrency users. However, its usage took a dark turn when it became apparent that malicious actors were using the protocol to launder stolen funds, including nearly $500 million linked to the North Korean-sponsored hacking collective, the Lazarus Group.

In August 2022, the Biden administration imposed sanctions on Tornado Cash and its founder, effectively making it illegal to use the service in the United States. However, a study found that usage of Tornado Cash continued to climb despite being listed on the blacklist, sparking concerns about the effectiveness of the sanctions.

Further, a federal appeals court ruled that the Treasury overstepped its legal authority by sanctioning the protocol, as it was designed to punish foreign entities. This ruling has now been overturned under the Trump administration's new stance.

The decision to lift sanctions on Tornado Cash has sparked mixed reactions. Crypto enthusiasts are celebrating what they see as a victory for "privacy," arguing that additional anonymity can only be beneficial. On the other hand, some have criticized the move, with Democratic Congressman Sean Casten labeling it "one of the most dangerous and irresponsible things coming out of the Trump White House."

There is an argument to be made that Tornado Cash's functionality can be used for malicious purposes, such as laundering cryptocurrency stolen from hackers. However, proponents of the service argue that the average person may use it for legitimate reasons, such as encrypted messaging or tracking on-chain activity.

However, experts caution that some tools designed to trace transactions are becoming increasingly sophisticated, making it more challenging to remain anonymous. Tornado Cash's users may find themselves caught in a cat-and-mouse game with law enforcement and financial institutions seeking to track their activities.

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