The Department of Treasury has lifted economic sanctions on Tornado Cash after previous legal challenges and defeats in court. Tornado Cash, a smart contract mixer launched in 2019 for Ethereum, faced sanctions due to alleged money laundering activities linked to North Korea. Following a federal court ruling that stated smart contracts could not be sanctioned, the Treasury reconsidered its position, albeit with ongoing concerns about illicit cryptocurrency activities. The decision highlights the balancing act of enforcing sanctions while adapting to changing legal and technological landscapes.
Based on the Administration's review of the novel legal and policy issues raised by use of financial sanctions against financial and commercial activity occurring within evolving technology and legal environments, we have exercised our discretion to remove the economic sanctions against Tornado Cash as reflected in Treasury's Monday filing in Van Loon v. Department of the Treasury.
Tornado Cash was launched in 2019 as a decentralized protocol to enhance transaction privacy on Ethereum. In August 2022, the mixer was added to the Office of Foreign Assets Control (OFAC) list, which includes sanctioned individuals and entities.
A Texas federal court ruled in January 2025 that the smart contracts couldn't be sanctioned, a decision upheld by the Fifth Circuit in November 2024.
The Treasury nevertheless reinforced its intent to enforce sanctions against Democratic People's Republic of Korea (DPRK), an ongoing source of geopolitical tension given the recent $1 billion+ hack from Bybit.
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