Tornado Cash Sanctions Lifted by US Treasury: $7B Crypto Mixer Cleared After Legal Battle

The U.S. Treasury Department has officially removed sanctions against Tornado Cash, the cryptocurrency mixing service previously accused of laundering over $7 billion for North Korean hackers and other illicit actors. This decision comes after a U.S. appeals court ruled in November that the Office of Foreign Assets Control (OFAC) had exceeded its authority when blacklisting the protocol in 2022.

Despite lifting the sanctions, Treasury Secretary Scott Bessent emphasized ongoing concerns about North Korea's "state-sponsored hacking and money laundering campaign," noting that "securing the digital asset industry from abuse by North Korea and other illicit actors is essential to establishing U.S. leadership."

The Treasury's reversal follows a lawsuit filed by six Tornado Cash users with financial backing from cryptocurrency exchange Coinbase. The department stated it repealed the sanctions after reviewing legal and policy issues related to applying sanctions within "evolving technology and legal environments."

In a parallel development, a developer known as Gunboats has already ported Tornado Cash to MegaETH's public testnet, creating a version called ETHTornado. MegaETH is a new blockchain claiming capacity for 20,000 transactions per second. Gunboats described the port as "a half joke" prompted by the Treasury's decision to lift sanctions.

"I thought, maybe someone should try to deploy [Tornado Cash] on the hottest thing right now...there is no change in code needed and that's really a good thing," Gunboats stated, highlighting how straightforward the implementation was using modern smart contract development tools.

Legal troubles persist for Tornado Cash's original developers despite the sanctions removal. Co-founder Roman Storm awaits trial on charges of facilitating more than $1 billion in money laundering and has denied any criminal activity. Another developer, Alexey Pertsev, was sentenced to over five years in prison in the Netherlands on money laundering charges last May.