Tornado Cash Cleared from OFAC Sanctions List, But Legal Challenges Continue
- U.S. Treasury removes Tornado Cash from OFAC sanctions after court ruling on smart contracts.
- Tornado Cash token surges 40% following U.S. Treasurys delisting announcement.
- U.S. Treasury maintains sanctions on Tornado Cash founder despite delisting addresses.
On March 21, 2025 the U.S. Treasury Department declared its decision to drop cryptocurrency service Tornado Cash from its sanctions list. The Office of Foreign Assets Control (OFAC) first placed Tornado Cash on its sanctions list in 2022 because it provided North Korean hackers and other criminal actors opportunities to cleanse stolen funds. The decision followed a federal court ruling made in late 2024 which stated that OFAC violated its regulatory power by sanctioning Tornado Cash smart contracts.
Legal Challenges and Court Rulings
Tornado Cash faced intensifying legal challenges when the government placed it on the sanctions list. Tornado Cash functions as an Ethereum-based platform for decentralized mixing which blends cryptocurrency payments between users thus creating difficult-to-track financial transactions. The U.S. government declared in 2022 that the cryptocurrency mixer allowed North Korean hacker group Lazarus along with other criminals to launder over $7 billion from its platform.
However, in November 2024 over a decision for the Fifth Circuit Court of Appeals stated that OFAC had overstepped its authority. The court said that the crypto mixers smart contracts were not property and cannot be restricted by using the International Emergency Economic Powers Act (IEEPA). This laid the precedent for the Treasury Departments subsequent decision to de-list Tornado Cash from its list of Specially Designated Nationals (SDN). Furthermore, another recent legal decision in January 2025 further strengthened the idea that it was impossible to exert control over Tornado Cash as if it is stock.
Ongoing Concerns and Future Monitoring
The U.S. Treasury Department has ended sanctions against the cryptocurrency mixer but continues active monitoring of money laundering incidents that involve North Korean hacking groups. The Treasury Department warned about digital assets used by cybercriminals to steal funds from cryptocurrency platforms while the Lazarus Group remains among the top concerns.
Following the delisting announcement its token (TORN) value experienced a substantial increase that resulted in a price boost of 40% within a short period. Treasury Secretary Scott Bessent clarified that although the U.S. government would keep monitoring digital assets it would actively work to stop abuse. The Treasury kept a neutral attitude to cryptocurrency innovation yet emphasized that maintaining privacy must coexist with national security requirements.
Read more: https://www.tronweekly.com/tornado-cash-cleared-from-ofac-sanctions-list/
Text source: TronWeekly
