US Delists Crypto Mixer Tornado Cash From Sanctions After Court Ruling

Treasury Removes Tornado Cash From Sanctions List Following Court Rulings, But Security Risks Remain

  • US Treasury has removed Tornado Cash from its sanctions list after reviewing “novel legal and policy issues” related to financial technology.
  • The decision follows recent court rulings that the Treasury exceeded its authority when sanctioning the crypto mixer in 2022.
  • Despite the sanctions removal, security experts warn users that Tornado Cash’s main interface remains compromised by malicious code.

The US Office of Foreign Assets Control (OFAC) has officially removed crypto mixer Tornado Cash from its sanctions list, marking a significant policy reversal. The decision comes after US courts determined that the Treasury Department had overstepped its authority when imposing restrictions on the privacy protocol in 2022.

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According to a statement from the US Treasury Department, officials lifted the sanctions after reviewing “novel legal and policy issues” that emerged in response to regulating financial activity “occurring within evolving technology and legal environments.” The department made this announcement today while removing the Tornado Cash website and associated cryptocurrency addresses from its Specially Designated Nationals List.

Despite this regulatory relief, the Treasury emphasized it “remains deeply concerned about the significant state-sponsored Hacking and money laundering campaign aimed at stealing, acquiring, and deploying digital assets for the Democratic People’s Republic of Korea (DPRK) and the Kim regime.” This statement underscores ongoing concerns about North Korean exploitation of cryptocurrency technologies.

Importantly, sanctions against Roman Semenov, one of Tornado Cash’s founders, remain in place, indicating the Treasury’s nuanced approach to enforcement in this case.

Cryptocurrency investigator ZachXBT has warned potential users that security risks persist even with sanctions lifted. The mixer’s “main frontend is still compromised,” according to ZachXBT, referring to malicious code injected into Tornado Cash interfaces last year that enabled attackers to steal user funds.

When the Treasury initially sanctioned Tornado Cash in 2022, it claimed the platform had facilitated the laundering of approximately $7 billion. However, recent court decisions have challenged the legal basis for sanctioning an automated protocol rather than specific individuals or organizations.

For users considering interacting with recently unsanctioned cryptocurrency mixers like Tornado Cash, security experts recommend extreme caution and thorough verification of interface integrity before conducting any transactions.

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