The cryptocurrency community saw a major shift on March 21 as the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) officially removed Tornado Cash, an Ethereum-based privacy tool, from its sanctions list. The decision to lift the sanctions comes amid a broader shift in U.S. crypto policy under the Trump administration, which has taken a more favorable stance on digital assets. With several prominent crypto advocates appointed to senior government positions, the administration has signaled a move toward a more crypto-friendly regulatory approach.
Tornado Cash is a decentralized protocol designed to enhance transaction privacy on the Ethereum blockchain by allowing users to mix their funds, making transaction trails harder to trace. In August 2022, the U.S. Office of Foreign Assets Control (OFAC) sanctioned the protocol, accusing it of facilitating the laundering of over $7 billion in cryptocurrencies, including $455 million allegedly linked to North Korean hackers, the Lazarus Group. This marked the first time a decentralized protocol faced such sanctions, igniting debates over the regulatory reach of open-source software.
Legal Challenge and Court Ruling
The sanctions against Tornado Cash faced strong legal opposition from its users, backed by major industry players like Coinbase. Plaintiffs argued that OFAC had overstepped its authority, as Tornado Cash’s immutable smart contracts could not be classified as “property” under the International Emergency Economic Powers Act (IEEPA). Their argument gained traction, and in November 2024, the Fifth Circuit Court of Appeals ruled in their favor, stating that OFAC had indeed exceeded its statutory authority by sanctioning the protocol’s smart contracts.
Following the court’s decision, OFAC conducted a review and ultimately removed Tornado Cash from its Specially Designated Nationals (SDN) list. Treasury Secretary Scott Bessent reaffirmed the department’s commitment to combating illicit cyber activities, particularly those tied to North Korea, while acknowledging the rapidly evolving nature of decentralized technologies.
Meanwhile, legal proceedings against Tornado Cash developers continue. As CNF reported in February, Alexey Pertsev, one of the protocol’s developers, was released though he remains under house arrest and electronic monitoring after being arrested in May 2024. Prosecutors had accused him of facilitating money laundering through the platform. His colleagues, Roman Storm and Roman Semenov, face similar charges. Storm is set to stand trial in July, where he risks a maximum sentence of 45 years if convicted.
The lifting of sanctions had an immediate effect on TORN’s market performance. The token’s price skyrocketed by over 60%, climbing from $7.50 to intraday highs of $15.23, reflecting renewed investor confidence and optimism about the protocol’s regulatory future. As of now, TORN is trading at $11.42, still down 97.08% from its all-time high of $436.16, recorded on February 13, 2021.
The token’s trading volume has surged by an astonishing 1,850.08% in the last 24 hours, reaching $3.5 million, while its market capitalization saw a more modest 36.75% increase to $60.35 million. With an increase of 50.90% over the past week, TORN has outperformed the broader cryptocurrency market, which has faced a 0.40% surge over the same period.