The US Department of Treasury has announced that it has removed the economic sanctions applied to Tornado Cash, a crypto mixer.
Tornado Cash, a decentralized platform, enables users to cloak crypto activity to a certain degree.
In 2222, Treasury’s Office of Foreign Assets Control (OFAC) sanctioned Tornado Cash, claiming it had been used by North Korea for its “malicious cyber activities and money-laundering of stolen virtual currency.” At that time, Tornado Cash was said to have laundered over $7 billion since its founding in 2019.
OFAC’s actions raised the ire of certain crypto industry insiders. Coinbase, a top crypto exchange, defended Tornado Cash, explaining that there are legitimate applications for this type of technology and users have lost access to a critical privacy tool. They also posited that Treasury exceeded its authority, given by Congress, by sanctioning a technology.
The autonomous nature of the mixer created a legal battle over whether the government could sanction software, with some drawing a parallel of sanctioning highways because criminals drive on them.
Treasury said it used its discretion to make the change, as reflected in its Monday filing in Van Loon v. Department of the Treasury.
Treasury 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. Treasury remains committed to using our authorities to expose and disrupt the ability of malicious cyber actors to profit from their criminal activities through the exploitation of digital assets and the digital assets ecosystem. We are also committed to enforcing our sanctions against the DRPK to constrain the regime’s ability to fund its weapons of mass destruction and ballistic missile programs. Treasury will continue to monitor closely any transactions that may benefit malicious cyber actors or the DPRK, and U.S. persons should exercise caution before engaging in transactions that present such risks.
The Secretary of the Treasury, Scott Bessant, commented on the decision:
“Digital assets present enormous opportunities for innovation and value creation for the American people. Securing the digital asset industry from abuse by North Korea and other illicit actors is essential to establishing U.S. leadership and ensuring that the American people can benefit from financial innovation and inclusion.”
Treasury has provided a list of deletions that have been made to OFAC’s Specially Designated Nationals (SDN) List of crypto addresses.
