OFAC lifts sanctions against crypto mixer Tornado Cash

The cryptocurrency mixer Tornado Cash is no longer under sanctions by the US Treasury Department. Officials recognized the difficulty of interpreting decentralized technologies within the current legislation.

Tornado Cash was launched in 2019 as a tool to ensure the anonymity of transactions on the Ethereum network. Later, the service was at the center of a scandal — it was accused of laundering more than seven billion dollars. Some of these funds, according to the investigation, were linked to the North Korean hacker group Lazarus. In August 2022, the US regulator added Tornado Cash to the sanctions list.

The turnaround in the case came after a trial, when an appellate court ruled that the service’s smart contracts could not be considered property under US law. This set a new legal precedent in the regulation of decentralized financial instruments.

In light of this decision, the agency decided to lift the sanctions, but emphasized the need for further control over transactions that may be related to cybercrime and the activities of hostile states. In particular, special attention is paid to potential money laundering schemes in favor of North Korea.

Despite the lifting of sanctions, the founders of Tornado Cash are still under investigation. Some of them are charged with conspiracy to launder money and violation of the sanctions regime. One of the co-founders has already received a real prison sentence on charges of laundering significant amounts through the platform.

Earlier, Ethereum co-founder Бутерін" href="https://noworries.news/biography/vitalij-buterin/" data-bio-id="3642″ data-wpel-link="internal">Vitalik Buterin donated 50 ETH to support the developers of the Tornado Cash project. This initiative is aimed at helping the team, which faced difficulties after the US Treasury Department’s sanctions in August 2022. The donation was made to the Tornado Cash Defense Fund initiative, which was created to finance the legal defense of the developers.