The US Treasury Department has dropped cryptocurrency mixer Tornado Cash from its sanctions list, the agency said on March 21.
The removal follows a January ruling by a US appeals court, which said the Treasury’s Office of Foreign Assets Control (OFAC) cannot sanction Tornado’s smart contracts because they are not the property of any foreign national.
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 OFAC removed several dozen Tornado-affiliated smart contract addresses on the Ethereum blockchain network from its sanctions list.
Tornado’s native token, Tornado Cash (TORN), is up around 60% on the news, according to data from CoinMarketCap.
As of March 21, TORN has a market capitalization of around $73 million and a fully diluted value (FDV) of nearly $140 million, the data shows.
OFAC is the Treasury’s office for administering economic and trade sanctions on states and foreign nationals.
Tornado Cash lets users pool crypto deposits into a mixer and then withdraw it later to different wallet addresses, making the original funding source difficult to track.
Money laundering allegations
In August 2022, OFAC sanctioned Tornado Cash after alleging the blockchain protocol helped launder cryptocurrency stolen by Lazarus Group, a North Korean hacking outfit.
Lazarus Group has allegedly stolen billions of dollars in crypto through various cyberattacks.
In February, Lazarus was accused of pilfering $1.4 billion from digital asset exchange Bybit in the largest-ever crypto exploit.
In total, Tornado Cash has purportedly facilitated the laundering of more than $7 billion in illicit funds since the protocol was launched in 2019, according to the US Treasury.
In 2024, a Dutch court found Alexey Pertsev, one of Tornado Cash’s developers, guilty of money laundering and sentenced him to 64 months in prison.
In February, Pertsev was released on house arrest, while he prepared an appeal of his conviction.
The Ethereum Foundation has pledged to donate $1.25 million for Pertsev’s defense.
“Privacy is normal, and writing code is not a crime,” the EF wrote in an X post while announcing the donation on Feb. 26.