The US Treasury Department has announced it will remove sanctions against Tornado Cash, a cryptocurrency mixer service that is accused of helping the North-Korean-linked Lazaro Group to wash off fraudulent revenues.
“We have exercised our discretion to remove sanctions on tornado cash based on the administration’s review of novel legal and policy issues raised by the use of financial sanctions on financial and commercial activities occurring within the evolving technology and legal environment,” the ministry said in a statement.
In connection with the move, more than 100 Ethereum (ETH) wallet addresses have also been removed from the specially designated national (SDN) list.
The department’s Office of Foreign Assets Control (OFAC) added tornado cash to its sanctions list in August 2022. Since its creation in 2019, it was estimated to have been used to wash over $7.6 billion in virtual assets.
However, the US Fifth Circuit issued a decision in November 2024, overturning the decision on the mixer and found OFAC “exceeded the authority defined by Congress” when it approved the cryptocurrency mixer.
This stems from the court’s view that OFAC sanctions groups have not been expanded to tornado cash, as they cannot be considered “property” under the International Emergency Economic Force Act (IEPA).
“In regards to immutable smart contracts, the court reasoned that, according to documents submitted by the Ministry of Finance as part of the case, “no party to contract,” as there are no people under control.
Moreover, it remains committed to using its powers to combat and disrupt the exploitation of ecosystems of digital assets, making it all possible to limit North Korea’s ability to fund mass destruction and ballistic missile program weapons.
“Digital assets present great opportunities for Americans to innovate and create value,” said Treasury Secretary Scott Bescent.
“Securing the digital asset industry from abuse by North Korea and other illegal actors is essential to establishing US leadership and ensuring that Americans can benefit from financial innovation and inclusion.”
Last May, a Dutch court sentenced Alexei Pertsev, one of the co-founders of tornado cash, to five years and four months in prison. Two other founders, Roman Storm and Roman Semenov, were indicted by the US Department of Justice in August 2023.
Source link
