type: timeline_event
The U.S. Treasury Department lifted sanctions on Tornado Cash, a cryptocurrency mixing service, on March 21, 2025, reversing a Biden-era designation that had placed the protocol on the Office of Foreign Assets Control (OFAC) sanctions list in August 2022. Treasury had originally sanctioned Tornado Cash after finding it had laundered over $7 billion in cryptocurrency since 2019, including hundreds of millions stolen by North Korea's Lazarus Group hacker collective. The sanctions had prohibited U.S. persons from using the service and had made its co-founders subject to criminal prosecution.
The removal of sanctions followed a Fifth Circuit Court of Appeals ruling in November 2024 that Treasury had exceeded its authority by sanctioning immutable smart contract code — software that cannot be altered or controlled by any person — under the International Emergency Economic Powers Act. Treasury chose not to appeal the ruling and used it as the basis for lifting sanctions on the smart contracts. Critics noted that even if the court ruling required removing sanctions on the immutable code, Treasury had discretion to maintain designations on the Tornado Cash service's operators and associated infrastructure, but chose to remove them entirely.
The decision benefited cryptocurrency money laundering operations by restoring access to a tool specifically designed to anonymize transactions and prevent law enforcement tracing. The Hacker News and crypto industry publications reported that the lifting of sanctions was part of the Trump administration's broader rollback of cryptocurrency enforcement, consistent with the administration's crypto-friendly regulatory posture and the significant financial contributions the crypto industry had made to Trump's 2024 campaign and inaugural fund. North Korea was known to rely heavily on cryptocurrency theft and mixing services to fund its weapons programs, making the sanctions removal a potential national security concern as well as a financial regulation issue.