Treasury delists crypto privacy tool from sanctions list
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The U.S. Treasury Department has removed the cryptocurrency privacy tool Tornado Cash from the country's sanctions list.
Why it matters: The Ethereum-based smart contract has been a favorite tool for North Korean hackers and other bad actors to cover their tracks after stealing digital assets from exchanges and decentralized finance projects.
Between the lines: The nature of decentralized, leaderless software opened a novel area of law for the government.
- Crypto advocates have argued that the Biden-era sanctions around the tool set a dangerous precedent in their targeting of an immutable smart contract that no one controls.
- An appeals court in November found the basis for the sanctions wanting, while also acknowledging the pressing need for a remedy.
What they're saying: Treasury Secretary Scott Bessent Friday said the Trump administration "remains deeply concerned" about North Korea's "state-sponsored hacking and money laundering campaign," and said it would continue to monitor transactions that may benefit hackers.
- "Digital assets present enormous opportunities for innovation and value creation for the American people. Securing the digital asset industry from abuse by North Korea and other illicit actors is essential," he said in a statement.
Catch up quick: Tornado Cash was a privacy tool on Ethereum that made it possible to deposit funds and draw them in such a way that it would be nearly impossible for a third party to connect the two transactions.
- It was created as a serious of unchangeable smart contracts that will run perpetually on the Ethereum blockchain. As such, despite the sanctions, the application has remained in use.
- In August 2022, the Biden Administration made it illegal for any U.S. persons to use any of the Tornado Cash smart contracts by adding them to Office of Foreign Asset Control's list of sanctioned websites.
- This came only a few months after a $620 million cyber-heist was linked to North Korea.
State of play: Addresses associated with the Tornado Cash have now been deleted from the U.S. Treasury's list of sanctioned entities.
What we're watching: Whether this decision has an impact on the trial of one of Tornado Cash's open source developers, Roman Storm, who was charged with conspiracy to commit money laundering and to violate sanctions.
