US Treasury Remove Sanctions Against Ethereum Mixer Tornado Cash

The U.S. Department of the Treasury announced today the removal of sanctions against Tornado Cash, a cryptocurrency mixer previously sanctioned for its role in laundering illicit funds.

Notably, the Department’s Office of Foreign Assets Control (OFAC) had initially sanctioned Tornado Cash in August 2022, citing its facilitation of over $7 billion in money laundering transactions since its inception in 2019.

US Treasury Lifts Sanctions

Despite the rescission of sanctions, the Treasury Department conveyed ongoing apprehension regarding North Korea’s illicit cyber activities.

“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,” the Treasury Department stated.

The statement further affirmed the Treasury’s commitment to employing its authority 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.”

North Korea’s Lazarus Group allegedly use Tornado Cash to launder their illicit funds. This group, a known state-sponsored hacking collective, reportedly used it to conceal the origins of stolen cryptocurrency.

Moreover, the Lazarus Group reportedly laundered about $455 million of the $620 million in Ethereum they took from Axie Infinity’s Ronin network in April 2022 using this system. Furthermore, individuals used Tornado Cash to launder at least $7.8 million from the Nomad Heist in August (out of $150 million taken) and over $96 million after the Harmony Bridge hack in June (out of $100 million taken).

Tornado Cash Co-founders Legal Battles

The lifting of sanctions occurs against the backdrop of ongoing legal proceedings against key figures associated with Tornado Cash. In August 2023, the U.S. Justice Department charged two Tornado Cash founders, Roman Storm and Roman Semenov, with helping criminals launder over $1 billion in stolen crypto through their service.

Storm was arrested in Washington when the charges were announced. The U.S. also penalized Semenov for helping the Lazarus Group. The charges said that the Tornado Cash founders didn’t create a system to prevent money laundering or identify users, which made it easy for criminals to launder large amounts of money.

Adding to the legal issues, Dutch authorities arrested Alexey Pertsev, another founder and key developer of Tornado Cash, and sentenced him to 64 months in prison for helping launder over $2 billion in crypto.