In a significant move, the U.S. Treasury has lifted sanctions against Tornado Cash, a crypto mixer service accused of facilitating illicit transactions for North Korea's Lazarus Group. This decision comes after a review by the U.S. Treasury Department's Office of Foreign Assets Control (OFAC), which had imposed sanctions on the platform in August 2022.

The U.S. Treasury removed sanctions against Tornado Cash, citing its commitment to countering North Korea's cyber threats and enforcing sanctions. Secretary of the Treasury Scott Bessent emphasized the importance of securing the digital asset industry from abuse by malicious actors. "Digital assets present enormous opportunities for innovation and value creation for the American people," he said. "Securing the digital asset industry from abuse by North Korea and other illicit actors is essential to establishing U.S. leadership and ensuring that the American people can benefit from financial innovation and inclusion."

The move also comes after the U.S. Justice Department charged two Tornado Cash founders, Roman Storm and Roman Semenov, with conspiracy to commit money laundering and conspiracy to violate the International Economic Emergency Powers Act. They were accused of facilitating over $1 billion in money laundering transactions and laundering hundreds of millions of dollars for the Lazarus APT group.

In March 2024, North Korea-linked Lazarus APT group allegedly resumed using the mixer platform Tornado Cash to launder $23 million. Blockchain cybersecurity firm Elliptic linked the theft of $112.5 million from exchange HTX, which took place in November 2023, to the North Korea's group.

Alexey Pertsev, one of the main developers of the Tornado Cash cryptocurrency mixer, was sentenced to 64 months in prison for helping launder more than $2 billion worth of cryptocurrency. The FIOD arrested him in Amsterdam in August 2022 and accused him of concealing criminal financial flows and facilitating money laundering using Tornado Cash.

The U.S. Treasury also removed over 100 Ethereum (ETH) wallet addresses from the Specially Designated Nationals (SDN) list, which includes individuals, entities, and organizations blocked from doing business in the U.S. due to their involvement in activities such as money laundering.

In response to the 2022 sanctions, Lazarus turned to the mixer Sinbad.io, but this service was seized by US authorities in November 2023. The removal of Tornado Cash's sanctions is seen as a significant development in the ongoing efforts to disrupt illicit digital asset activities and counter North Korea's cyber threats.

**Background on Tornado Cash and Its Controversies**

Tornado Cash is a crypto mixer that allows users to mix their cryptocurrency with other funds, making it difficult to track the origin of the funds. The platform has been accused of facilitating money laundering for North Korean-linked Lazarus APT group.

In August 2022, the U.S. Treasury Department's Office of Foreign Assets Control (OFAC) imposed sanctions on Tornado Cash, citing its involvement in illicit activities. The sanctions were imposed under Executive Order (E.O.) 13694.

The move was seen as a significant blow to the crypto mixer service, and it raised concerns about the use of financial sanctions against financial and commercial activity occurring within evolving technology and legal environments.

**Impact of Sanctions Removal**

The removal of Tornado Cash's sanctions is likely to have several implications:

* Facilitating illicit transactions: The removal of sanctions may facilitate further illicit transactions through Tornado Cash, potentially benefiting North Korea's Lazarus Group. * Money laundering: The platform has been accused of facilitating money laundering for the Lazarus APT group. * Regulatory challenges: The removal of sanctions raises regulatory challenges for the U.S. government and other countries to address the use of crypto mixers like Tornado Cash.

Overall, the removal of sanctions against Tornado Cash is a significant development in the ongoing efforts to disrupt illicit digital asset activities and counter North Korea's cyber threats.