The US Treasury Department lifted economic sanctions on Tornado Cash Friday, a cryptocurrency mixing company that was accused of facilitating illicit financial activities including money laundering by North Korean hackers.
The move comes after a legal challenge by cryptocurrency advocates, and a court decision that found the sanctions exceeded Treasury’s authority.
The Office of Foreign Assets Control of the Treasury blacklisted Tornado Cash in 2022. This service allows users to hide the origins and destination of digital transactions.
Regulators claim that the platform was used to launder more than $7 billion in illicit money, including $455 millions stolen by the North Korean hacking group Lazarus.
The Treasury Department maintained that North Korea’s cybercrime operations were still a serious threat, despite the sanctions being reversed.
Officials said that the administration would continue to investigate other measures to combat the misuse and criminal use of digital assets.
Scott Bessent, Secretary of the Treasury, said that digital assets offer enormous opportunities for innovation and creating value for the American people.
“Securing the digital assets industry from abuse by North Korea, and other illicit actors, is essential to establish US leadership and ensure that the American people benefit from financial innovation and inclusiveness.”
Tornado Cash’s TORN coin surged by over 75% after the Treasury’s announcement, marking a significant shift in the market.
Legal battles and court rulings
The decision to lift sanctions follows a long court battle initiated by six users of Tornado Cash, who were financially supported by cryptocurrency exchange Coinbase.
The plaintiffs argued sanctioning open-source programs amounted to a violation of free speech and hampered technological development.
In November 2024, a federal appeals court found in their favor and determined that the Treasury had exceeded its authority.
The court ruled that Tornado Cash’s immutable smart contract did not meet the legal definition “property”, as defined by US sanctions laws. This rendered OFAC’s designation invalid, under the International Emergency Economic Powers Act.
Judge Don Willett acknowledged in a court-written opinion that, while technology could be misused for illicit purposes by criminals, it was Congress’ responsibility to regulate such tools, not the judiciary.
The ruling raised concerns about the way US agencies apply financial sanction in a rapidly evolving world of decentralized financing.
How the cryptocurrency regulation is shaping under Trump
The Biden administration’s stance on cryptocurrency regulations has been scrutinized, especially as former President Donald Trump has presented himself as a crypto candidate.
Trump hosted a White House Summit with industry leaders in order to discuss regulatory changes.
Tornado Cash continues to be subjected to legal scrutiny.
Roman Storm, co-founder of the company, is facing trial in the US for allegedly facilitating illicit transactions worth over $1 billion.
Alexey Pertsev was sentenced to five years in prison in the Netherlands for money laundering last year.
The lifting of Tornado Cash sanctions highlights the ongoing tensions between regulators and cryptocurrency industry as governments struggle to balance financial innovations with the need for security and oversight.
This post TORN soars over 75% after US lifts Tornado Cash Sanctions, citing legal concerns and policy concerns could be modified as new information becomes available.
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