| Key Points: – The U.S. Treasury lifted sanctions on crypto mixer Tornado Cash after legal rulings questioned its authority. – Co-founders Roman Storm and Roman Semenov are still facing legal action for money laundering and sanctions violations. |
The U.S. Treasury Department has officially removed Tornado Cash, a high-profile cryptocurrency mixing service, from its Specially Designated Nationals (SDN) List, signaling a shift in how regulators approach emerging technologies in the digital asset space.
The decision comes after legal setbacks for the Treasury and growing scrutiny over the agency’s enforcement powers.
Tornado Cash Removed from U.S. Sanctions List After Legal Setbacks
The Office of Foreign Assets Control (OFAC), the Treasury arm responsible for enforcing economic and trade sanctions, announced the removal on Friday.
The move marks a significant turn in a saga that began in 2022 when the U.S. government sanctioned Tornado Cash, alleging it had facilitated the laundering of more than $7 billion, including funds tied to North Korea’s Lazarus Group.
The Treasury said it lifted the sanctions after reviewing “novel legal and policy issues” surrounding financial activity in evolving technological and legal environments. Despite the policy reversal, the department maintained its broader concerns about state-sponsored cybercrime and illicit finance.
“We remain 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,” a statement from the Treasury read.
The lifting of the sanctions has sent the price of Tornado Cash’s native TORN token soaring more than 60% to over $15.
Security Risks and Regulatory Concerns Remain for Crypto Mixer
Blockchain investigator ZachXBT noted that Tornado Cash’s main user interface remains compromised. Hackers previously embedded malicious code into the user interface, allowing them to drain user deposits.
Although Tornado Cash itself is no longer sanctioned, legal challenges persist for its founders. Roman Semenov remains on the SDN list, though his designation has been revised—removing the “cyber-enabled activities” tag but retaining sanctions tied to North Korea.
Semenov, along with fellow co-founder Roman Storm, was indicted in August 2023 for alleged money laundering and sanctions violations linked to the platform.
The decision to delist Tornado Cash follows a series of recent court rulings that undercut the Treasury’s initial enforcement. A federal appeals court ruled last November that the platform’s smart contracts did not constitute the “property of a foreign national or entity,” limiting the Treasury’s authority to restrict them under the International Emergency Economic Powers Act.
Additionally, in January 2025, a Texas-based federal court sided with users of the platform, further weakening the government’s legal position.
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