Chiara Bianchi
The U.S. Department of the Treasury has officially lifted economic sanctions on Tornado Cash, a cryptocurrency protocol designed to enhance transaction privacy on the blockchain.
This decision reverses restrictions imposed nearly three years ago and removes Tornado Cash and multiple associated wallet addresses from the Office of Foreign Assets Control (OFAC) Specially Designated Nationals (SDN) list, according to a statement released on Friday.
The move follows a ruling by an appeals court, which determined that OFAC exceeded its legal authority when it sanctioned Tornado Cash in November 2024. In January 2025, a U.S. District Court in Texas ordered the reversal of these sanctions, citing an overreach in regulatory enforcement.
Tornado Cash Previously Accused of Facilitating Cybercrime
The U.S. government initially sanctioned Tornado Cash in August 2022, alleging that cybercriminal organizationsโparticularly North Korea’s Lazarus Groupโused the protocol to launder stolen cryptocurrency. Authorities in the United States, Japan, and South Korea have long claimed that North Korea exploits cryptocurrency hacks to fund its ballistic missile programs and weapons of mass destruction (WMD) projects.
The Tornado Cash protocol operates by mixing transactions, pooling users’ assets together before redistributing them, effectively obscuring the origin of funds and enhancing privacy.
U.S. Treasury Emphasizes Security in the Crypto Sector
Scott Bessent, U.S. Secretary of the Treasury, acknowledged the importance of both financial innovation and security in the digital asset space.
“Digital assets present enormous opportunities for innovation and value creation for the American people,” Bessent stated. “Protecting the digital asset industry from abuse by North Korea and other illicit actors is essential to U.S. leadership in financial innovation and inclusion.”
Lazarus Groupโs Continued Cyber Threat in Crypto
The Lazarus Group, linked to multiple high-profile crypto hacks, remains a significant concern for regulators. Recent exploits attributed to the group include the $1.4 billion Bybit hack, the $600 million attack on Axie Infinityโs Ronin sidechain, and the $28 million breach of the Deribit exchange.
With the sanctions lifted, the debate continues over the balance between privacy rights in blockchain technology and the need to prevent financial crimes within the crypto industry.
