Big news in the crypto world! The Department of Treasury has officially lifted sanctions on Tornado Cash, the privacy-focused Ethereum mixer. This decision comes after Tornado Cash faced a series of legal and administrative hurdles.

In a statement, the Treasury Department explained their decision, saying, “After carefully reviewing the complex legal and policy questions surrounding the use of financial sanctions in the rapidly changing tech and legal landscape, we’ve decided to remove the economic sanctions against Tornado Cash. This decision is detailed in our Monday filing for the Van Loon v. Department of the Treasury case.”

Quick Recap: The Tornado Cash Saga

Let’s rewind a bit. Tornado Cash emerged in 2019 as a decentralized tool designed to boost transaction privacy on the Ethereum blockchain.

However, things took a turn in August 2022 when the Office of Foreign Assets Control (OFAC) added Tornado Cash to its sanctions list – a list typically reserved for individuals and entities considered threats. U.S. authorities claimed the mixer played a role in laundering over $7 billion, with some of these funds allegedly tied to North Korea’s Lazarus Group.

The sanctions meant U.S. residents were prohibited from using Tornado Cash. Adding fuel to the fire, legal proceedings were initiated against its co-founders, Roman Storm and Roman Semenov, who were indicted in 2023 on money laundering charges linked to over $1 billion in transactions.

But the story doesn’t end there. Six users of Tornado Cash, with financial backing from Coinbase, decided to fight back, filing a lawsuit against the Treasury to challenge the sanctions.

And they saw some success! In January 2025, a Texas federal court sided with the users, ruling that smart contracts themselves couldn’t be sanctioned. This decision was later upheld in November 2024 by the Fifth Circuit court.

Now, fast forward to today. The Treasury has officially reversed course and lifted the sanctions. They cited “evolving legal and technological considerations” as the reason, but also emphasized ongoing concerns about illegal activities in the crypto space and reaffirmed their commitment to sanctions related to North Korea (DPRK).

Tension Remains

Despite lifting the Tornado Cash sanctions, the Treasury made it clear they aren’t easing up on North Korea (DPRK). They reiterated their dedication to enforcing sanctions against the DPRK, highlighting the recent $1 billion+ hack of Bybit, allegedly carried out by Lazarus Group, a hacking collective with suspected ties to North Korea, as a major geopolitical concern.

In their own words, the agency stated, “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.”

They further cautioned, “Treasury will continue to closely monitor any transactions that could benefit malicious cyber actors or the DPRK. U.S. individuals and entities should be very careful when engaging in transactions that might pose such risks.”

While the lifted sanctions are undoubtedly positive news for developers of financial privacy software, it’s still too early to say what the broader implications are for the Bitcoin and crypto industry. It also remains to be seen if this will impact other ongoing legal battles, such as the cases against the developers of Samurai Wallet.

Secretary of the Treasury Scott Bessent concluded, “Digital assets offer incredible potential for innovation and creating value for Americans. Protecting the digital asset industry from exploitation by North Korea and other illicit actors is crucial for maintaining U.S. leadership and making sure Americans can benefit from financial innovation and inclusion.”