The U.S. has removed Tornado Cash from its blacklist. A U.S. appeals court ruled in January that the sanctions were not legally justified, leading to the removal of Tornado Cash.
The U.S. Treasury announced on March 21 that it had delisted the cryptocurrency mixer Tornado Cash from sanctions.
Since a U.S. appeals court ruled in January that Tornado’s smart contracts do not qualify for OFAC sanctions as they are not foreign-owned, the U.S. government lifted the sanctions.
According to the January court ruling, “Tornado Cash’s immutable smart contracts (the lines of privacy-enabling software code) are not the ‘property’ of a foreign national or entity, meaning […] OFAC overstepped its congressionally defined authority.”
In a March 21 statement, the Treasury said that OFAC had removed numerous Tornado-affiliated smart contract addresses on the Ethereum network from its sanctions list.
After the announcement, the price of Tornado Cash’s token, TORN, jumped nearly 60%, according to CoinMarketCap.
Data shows that TORN’s market capitalization reached around $73 million on March 21, while its fully diluted valuation neared $140 million.
OFAC, which operates under the U.S. Treasury, regulates foreign states and nationals by handling economic and trade sanctions.
Tornado Cash allows users to mix their cryptocurrency holdings, withdraw them to different wallets, and make the initial funding source more difficult to identify.
In August 2022, OFAC sanctioned the protocol, alleging that Tornado Cash aided in laundering crypto stolen by the Lazarus Group, a North Korean hacking organization.
Authorities have linked Lazarus Group to several cyberattacks and accused it of stealing billions in cryptocurrency. The recent was the Bybit attack which resulted in a $1.4B loss though a significant amount remain traceable according to the exchange.
Reports from February claim that Lazarus carried out the largest crypto theft ever by stealing $1.4 billion from the exchange Bybit.
Since its inception in 2019, Tornado Cash has allegedly facilitated the movement of more than $7 billion in illicit funds, according to the U.S. Treasury.
In 2024, a Dutch court found Alexey Pertsev, a Tornado Cash developer, guilty of money laundering and sentenced him to 64 months in prison.
As he worked on his appeal, officials released Pertsev from custody and placed him under house arrest in February.
The Ethereum Foundation has vowed to contribute $1.25 million toward covering Pertsev’s legal expenses.
On Feb. 26, the Ethereum Foundation announced the donation on X, stating, “Privacy is normal, and Writing code is not a crime.”
