The US Department of the Treasury on Friday announced that it has removed economic sanctions against the open source, decentralized cryptocurrency mixer Tornado Cash.
Describing Tornado Cash as a hub for laundering stolen funds, the US sanctioned the service in 2022, prohibiting US individuals and businesses from using it.
When announcing the sanctions, the Treasury said Tornado Cash had been used to launder over $7 billion in cryptocurrency, including hundreds of millions of dollars that North Korean hackers had stolen from several crypto exchanges.
In August 2023, the US charged (PDF) Tornado Cash co-founders Roman Storm and Roman Semenov for allegedly laundering over $1 billion in cryptocurrency using the mixer.
The same month, a Texas judge sided with the Treasury in a lawsuit filed against the department by Tornado Cash users and privacy advocates over the sanctions.
In November 2024, however, the Fifth Circuit Court of Appeals in New Orleans ruled the sanctions unlawful, saying that smart contract-based services do not fall under the Treasury Department’s authority, as they do not qualify as property, and that the agency cannot block open source code.
On March 21, the Treasury announced it has “exercised [its] discretion to remove the economic sanctions against Tornado Cash”, and notified the court of the action, saying that the case should be considered moot.
Coinbase’s chief legal officer Paul Grewal, however, suggests that a final court judgment is necessary, pointing out that the case can only be mooted if the Treasury can show that it would not revisit its decision and re-issue sanctions against Tornado Cash and related entities.
While announcing the sanction lift, the Treasury Department noted that North Korea’s hacking and money laundering activities remain a risk that it aims to expose and disrupt. In addition, it remains committed to enforcing sanctions against North Korea, and it will continue to monitor all transactions that threat actors or North Korea may benefit from.
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