US Treasury Removes Sanctions on Ethereum Mixer Tornado Cash

The U.S. Treasury removed sanctions on Ethereum-based transaction mixer Tornado Cash on Friday, citing a reassessment of digital finance policies and legal concerns.

In a Friday press release , the Treasury said it reassessed the application of sanctions on decentralized platforms like Tornado Cash.

The announcement followed a Monday court filing in Van Loon v. Department of the Treasury, where officials argued that evolving financial technologies required updates to how sanctions laws are applied.

Despite lifting sanctions on Tornado Cash, the Treasury stressed that it remains vigilant against cybercrime, particularly hacking and money laundering tied to North Korea.

“Digital assets present enormous opportunities for innovation and value creation for the American people,” said Treasury Secretary Scott Bessent.

“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,” adds Bessent.

Sanctions on Tornado Cash First Imposed in 2022 After North Korean Hack

In August 2022, the Treasury’s Office of Foreign Assets Control (OFAC) sanctioned Tornado Cash , saying it failed to implement controls preventing money laundering by cybercriminals.

At the time, OFAC stated the service repeatedly failed to stop illicit funds from being laundered through its platform, including funds linked to state-sponsored hacking groups such as those tied to North Korea.

On Tuesday, Coinbase’s Chief Legal Officer Paul Grewal criticized the Treasury for ignoring a Fifth Circuit ruling that called for Tornado Cash’s removal from the sanctions list.

Grewal argued that immutable smart contracts fall outside the scope of U.S. sanctions laws, and the government’s application of sanctions to decentralized code was legally incorrect.

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