U.S. Treasury lifts Sanctions on Tornado Cash
The U.S. Department of the Treasury has rescinded sanctions on Tornado Cash, a decentralized crypto mixer. This decision legalizes its use for Americans, reversing the August 2022 sanctions.
Tornado Cash, an Ethereum-based protocol launched in 2019, enhances transaction privacy. It allows users to hide the origins and destinations of their crypto transfers. However, it has been misused for money laundering, including by North Korea’s Lazarus Group.
The Treasury had accused Tornado Cash of laundering over $7 billion in virtual currency. Treasury Secretary Scott Bessent stated that securing the digital asset industry from abuse is crucial for U.S. leadership and innovation.
Sanctioning open-source software sparked free speech concerns. Critics argued it stifled technological innovation. Coinbase-backed users filed a lawsuit against the sanctions.
In November 2024, a federal appeals court ruled in favor of the plaintiffs. The court said the Treasury overstepped its authority. Judge Don Willett noted that while the technology could be misused,Congress shoudl amend relevant laws.
This decision highlights the ongoing debate between financial privacy and regulatory oversight in the crypto space.
