The U.S. Treasury Department has lifted its sanctions on Tornado Cash, the cryptocurrency mixing service it blacklisted in 2022, after a federal court found the agency had gone beyond its legal authority.
The move follows a November appeals court decision that sided with plaintiffs who sued the department, arguing that the sanctions were improperly applied to open-source software, according to Bloomberg. The plaintiffs included six individuals, two of whom work for Nasdaq-listed firm Coinbase, the largest U.S. crypto exchange, which funded the legal challenge.
Tornado Cash was initially sanctioned for allegedly helping North Korean hackers launder over $455 million in stolen cryptocurrency. The Treasury’s Office of Foreign Assets Control (OFAC) claimed the tool played a key role in concealing the digital footprints of the Lazarus Group, a state-backed hacking organization.
While lifting the ban, Treasury officials emphasized they remain focused on stopping North Korea and other actors from misusing digital assets to finance illegal activity.
“Securing the digital asset industry from abuse by North Korea and other illicit actors is essential to establishing US leadership and ensuring that the American people can benefit from financial innovation and inclusion,” said Treasury Secretary Scott Bessent, after saying that cryptocurrencies “present enormous opportunities for innovation and value creation for the American people.”
Tornado Cash’s Token Surges
The governance token of the Tornado Cash protocol, TORN, saw a massive 72% price jump after the announcement, according to CoinMarketCap data, to now trade at $14.8 per token.
The cryptocurrency’s trading volume also exploded by more than 1,300% over the past 24-hour period to stand at $2.12 million, up from around $160,000 seen a day earlier.
The legal challenges Tornado Cash faced also led to the arrest of its developer, Alexey Pertsev, who spent nearly two years in a Dutch prison before being released. TORN is also not listed on major exchanges, likely due to these legal challenges.
