US Treasury Removes Tornado Cash From OFAC Sanctions List
The Department of Treasury has officially lifted sanctions on Tornado Cash, an Ethereum-based smart contract mixer, following a series of legal defeats and administrative challenges. This decision comes after the Administration’s review of the complex legal and policy issues surrounding financial sanctions in evolving technology and legal environments.
Tornado Cash was launched in 2019 with the aim of enhancing transaction privacy on the Ethereum blockchain. However, in August 2022, the mixer was added to the Office of Foreign Assets Control (OFAC) list due to allegations of facilitating over $7 billion in money laundering, including funds linked to North Korea’s Lazarus Group. This led to a ban on U.S. persons using the service and legal action against its co-founders, Roman Storm and Roman Semenov, who were indicted in 2023 for money laundering tied to over $1 billion in transactions.
A group of six Tornado Cash users, supported by Coinbase, filed a lawsuit against the Treasury challenging the sanctions. In January 2025, a Texas federal court ruled that smart contracts like Tornado Cash could not be sanctioned, a decision upheld by the Fifth Circuit in November 2024. Following these legal victories, the Treasury has now officially lifted the sanctions on Tornado Cash, citing evolving legal and technological considerations.
Despite this positive development for financial privacy software developers, the Treasury emphasized its commitment to enforcing sanctions against the Democratic People’s Republic of Korea (DPRK). The agency expressed concerns about state-sponsored hacking and money laundering campaigns targeting digital assets for the DPRK and the Kim regime. It urged U.S. persons to exercise caution before engaging in transactions that could benefit malicious cyber actors or the DPRK.
Secretary of the Treasury Scott Bessent highlighted the importance of securing the digital asset industry from abuse by illicit actors to promote innovation and value creation for the American people. While the lifting of sanctions is a step forward for financial privacy, the implications for the broader Bitcoin and crypto industry remain uncertain. It is unclear how this decision will impact upcoming court cases, such as those involving the developers of Samurai Wallet.
Overall, the Treasury’s decision to lift sanctions on Tornado Cash reflects a nuanced approach to regulating financial activities in the digital asset space. By balancing innovation with security concerns, the Treasury aims to establish U.S. leadership in the evolving landscape of financial technology.
