- The US Department of the Treasury published a press release on 21 March 2025, announcing the removal of economic sanctions against Tornado Cash.
- Tornado Cash is a firm which enables crypto transactions to retain a higher level of privacy and is also known as a ‘cryptocurrency mixer’.
- Allegations had previously been made under the Biden administration that Tornado Cash had aided in the laundering of over US$7B for cyber hackers from North Korea, as well as other groups.
- The Treasury remains explicit in its vigilance against groups, including North Korean groups, laundering funds via digital assets.
- This repeal by the US highlights the current administration’s increasingly friendly stance towards digital assets.
Tornado Cash surged over 76% within hours of the US government removing sanctions against them. A number of other privacy-focused cryptocurrencies also gained price momentum over the weekend.
Tornado Cash had previously been accused of helping to launder hundreds of millions of dollars for Lazarus, a North Korean hacking group. The Tornado Cash founders were charged with money laundering in 2022.
However, the Office of Foreign Assets Control (OFAC) was deemed to have exceeded its authority in November following the ruling by a US appeals court, but sanctions have remained in place until now.
With the Treasury using its discretion to repeal sanctions against Tornado Cash, the ‘evolving technology and legal environment’ was considered a significant contributing factor towards this decision.
What is Tornado Cash?
Tornado Cash was considered an important platform for protecting the privacy of users when transacting on-chain. Privacy has always been an important concept for blockchain and is a core principle of why decentralisation appeals to many users.
Tornado Cash would protect your privacy by shielding your identity without having to expose your wallet’s entire transaction history.
However, Tornado Cash’s platform, while able to protect the legitimate privacy concerns of some users, could also be leveraged by nefarious parties for fraudulent purposes.
Related: Chainlink Co-founder Urges US to Lead Tokenised Real-World Assets Industry to Remain Competitive in Global Finance
The Curveball
Despite repealing the sanctions, Coinbase’s Chief Legal Officer Paul Grewal revealed that the US Treasury filed ‘another late Friday pleading against Tornado Cash.’
While OFAC has removed Tornado Cash from the sanctions list, Grewal highlights that this move essentially means that Tornado Cash could be re-listed again.
It’s also worth noting Secretary of the Treasury Scott Bessent’s recent comments:
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.
Scott Bessent, Secretary of the TreasuryRelated: While Ripple Celebrates Win, Execs Say ‘Lingering Uncertainty’ Remains
A Changing Regulatory and Legal Environment
Overall, the repeal of sanctions against Tornado Cash is still a sign of an increasingly friendly regulatory environment towards digital assets.
Digital assets present enormous opportunities for innovation and value creation for the American people.
Scott Bessent, Secretary of the Treasury.With the US embracing a strategic reserve of digital assets and a string of legal wins for the crypto industry, the innovation of digital assets in the US looks promising. Consequently, this is a win for digital assets in terms of legitimacy, development, and mass adoption.
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