US Treasury Drops Tornado Cash Restrictions Despite Lazarus Group Concerns

The US Treasury recently dropped sanctions against the infamous Tornado Cash crypto blending service following the service’s involvement in laundering activities.

The US removes Tornado Cash from global blacklist

The US Treasury Department officially lifted restrictions against Tornado Cash, a so-called crypto mixer (or crypto blender) notoriously popular with cybercriminals, including North Korea's infamous Lazarus Group.

Tornado Cash found itself in the crosshairs after laundering billions in stolen crypto, leading to severe backlash and high-profile arrests last year. Earlier this month, Lazarus Group was spotted using the previously sanctioned crypto mixer to launder stolen proceeds.

However, a recent ruling by a US federal court essentially forced the Treasury's hand, concluding that sanctions couldn't target decentralized software itself.

Controversial sanction rollback decision

The court's ruling sparked heated debate about governmental oversight versus blockchain freedom.

Treasury officials initially argued that Tornado Cash facilitated criminal activities, including crypto theft and ransomware payments, thus justifying heavy-handed sanctions.

However, critics maintained that penalizing open-source software sets a dangerous precedent, potentially stifling innovation and punishing legitimate users.

Officials still keep an eye on Tornado Cash

The rollback of sanctions, however, doesn’t necessarily leave Tornado Cash in the clear. US authorities continue urging vigilance, stressing that using mixers still raises red flags, especially as laundering cryptocurrency remains firmly on their radar.

For its part, the Treasury vowed to monitor suspicious transactions, as well as those connected to malicious actors, hinting that this might not be the end of the story.

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