US Treasury lifts sanctions on Tornado Cash, allowing access for Americans

The US Treasury Department has raised sanctions against cash, a decentralized cryptocurrency mixer, effectively legalizing its use for American citizens.

This move Conversely, the August 2022 sanctions imposed by the Office of Foreign Assets Control, which accused the platform of facilitating money laundering activities, including transactions linked to North Korea Lazarus group.

Tornado Cash, launched in 2019, is a protocol based on Ethereum which improves the confidentiality of transactions by allowing users to obscure the origins and destinations of their cryptocurrency transfers.

Although this service is intended for people looking for financial privacy, it has also been operated by malicious actors to whiten illicit funds.

The Treasury Department had alleged that the species tornado was Used to whiten More than $ 7 billion in virtual currency, including $ 455 million stolen by the Lazare group. ​

The Treasury Secretary, Scott Bessent, commented on the decision, declaring: “Digital assets present enormous opportunities for innovation and value creation for the American people. Securing the digital asset industry based on abuse by North Korea and other illicit players is essential to establish American leadership and guarantee that the American people can benefit from innovation and financial inclusion. ”

Problems of freedom of expression

Critics argued that the sanction of open-source software break freedom of expression and technological innovation. In response, a group of users of Tornado Cash, supported by Cryptocurrency Exchange Coinbase, has filed a legal action contesting the sanctions.

In November 2024, a federal court of appeal ruled in favor of the complainants, declaring that the Treasury had exceeded his authority. The court stressed that the immutable intelligent contracts of Tornado Cash did not qualify as “property” under federal law, thus not falling under the scope of the international law on economic powers.

Judge Don Willett noted that while technology could be misusedIt was the role of the congress, not the courts, to modify the relevant laws. ​