U.S. Government Removes Tornado Cash Sanctions

The U.S. Treasury Department's sanctions watchdog has removed Tornado Cash, a crypto mixing tool accused of helping North Korea's Lazarus Group launder funds, from its global blacklist.

Tornado Cash was sanctioned multiple times over allegations of assisting the Lazarus Group in laundering stolen funds from various hacks and thefts. The U.S. Treasury Department's Office of Foreign Asset Control (OFAC) had imposed sanctions on Tornado Cash, meaning no U.S. person or anyone doing business with the U.S. could engage with it financially.

However, a federal appeals court ruled last November that OFAC couldn't sanction Tornado Cash's smart contracts because they weren't the "property" of any foreign national. The ruling raised concerns about the ability to target specific crypto assets and protocols in sanctions regimes.

"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," said a press release from the U.S. Treasury Department.

Another release from OFAC lists over 100 Ethereum (ETH) addresses that are being removed from the Specially Designated Nationals list, which is the record Treasury uses for maintaining its blacklist.

Roman Storm, one of the co-founders of Tornado Cash, faces a criminal trial this July over his alleged role in developing the smart contracts and protocols. Another developer was charged but has not yet been arrested.

After the Fifth Circuit's November ruling, Storm's lawyers filed a motion requesting the court reconsider its earlier decision to deny the dismissal of charges against him. The motion was dismissed in February, with Judge Katherine Polk Failla of the Southern District of New York (SDNY) arguing that the sanctions against Tornado Cash did not affect the sanctions Defendant allegedly conspired to violate.

Storm's lawyer, Brian Klein of Waymaker LLP, expressed relief over the removal of sanctions from Tornado Cash. "Now the SDNY prosecutors should similarly reconsider their unfortunate decision to charge our client, and dismiss their case against him," he said.

In a statement, Treasury Secretary Scott Bessent emphasized the need for the U.S. 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 on Friday, suggested that removing all sanctions from Tornado Cash could have significantly disruptive consequences for national security and law enforcement.

The TORN token jumped 40% in the minutes after the Treasury's statement, indicating a positive reaction to the removal of sanctions.

Update (March 21, 2025, 15:05 UTC):

Athens. Nikhilesh De is CoinDesk's managing editor for global policy and regulation, covering regulators, lawmakers and institutions. When he's not reporting on digital assets and policy, he can be found admiring Amtrak or building LEGO trains.