Trump's Treasury Department Lifts Restrictions on Cryptocurrency's Preferred Money Laundering Operation
In a surprising turn of events, the Biden-led Treasury Department has reversed its decision to sanction Tornado Cash, a cryptocurrency mixer. Originally outlawed in August 2022 due to allegations of laundering over $7 billion in ill-gotten gains, including nearly $500 million allegedly linked to the Lazarus Group's hacking activities, Tornado Cash is now legal again within U.S. borders.
Tornado Cash, launched in 2019, offers anonymous transactions by obfuscating ownership over cryptocurrencies. Users send "tainted" coins (coins linked to a specific person) through the mixer, which breaks down the funds, mixes them with others, and moves them around until they become indistinguishable. Critics raised concerns that this anonymity made it a popular choice among cybercriminals.
The sanctions, however, seemed to have minimal impact on Tornado Cash's popularity. Despite appearing on the Treasury Department's blacklist, usage continued to surge. This prompted legal challenges, with a federal appeals court ruling in late 2024 that the Treasury overstepped its authority by sanctioning the protocol. The court determined that Tornado Cash, operated by self-executing smart contracts, could not be deemed a foreign entity subject to sanctions.
The current administration's decision to lift the sanctions on Tornado Cash has sparked mixed reactions. crypto enthusiasts hail it as a victory for privacy, while lawmakers like Democratic Congressman Sean Casten criticize it as "one of the most dangerous and irresponsible" moves coming from the White House.
The recent ruling and Tornado Cash's legal status might not necessarily affect the average user. Advanced tools for monitoring on-chain activity are becoming increasingly sophisticated, potentially making transactions on Tornado Cash traceable with enough effort, according to some experts.
Despite the lifting of sanctions, the U.S. remains vigilant against North Korea's hacking and money laundering activities and promises to keep a watchful eye on transactions that may benefit malicious actors. This shift in policy aligns with a broader approach to regulating digital currencies. It's essential to note that the sanctions were not lifted by the Trump administration, but rather by the Biden administration, following a review of the evolving technology and legal environments in March 2025.
- The Biden-led Treasury Department's decision to lift the sanctions on Tornado Cash, a tech tool used for anonymous cryptocurrency transactions, has been met with mixed reactions, with tech enthusiasts viewing it as a victory for privacy, while lawmakers like Democratic Congressman Sean Casten criticize it as "one of the most dangerous and irresponsible" moves.
- Operating on the principle of self-executing smart contracts, Tornado Cash, launched in 2019, offers privacy by obfuscating ownership over cryptocurrencies, a characteristic that has raised concerns among critics who argue it makes the platform popular among cybercriminals.
- Despite the lifting of sanctions and a surge in usage following its initial outlawing in August 2022, the U.S. remains vigilant against activities linked to North Korea's hacking and money laundering activities, promising to keep a watchful eye on transactions that may benefit malicious actors.
- In 2025, following a review of the evolving technology and legal environments, the Biden administration decided to lift the sanctions on Tornado Cash that were initially imposed due to allegations of laundering over $7 billion in ill-gotten gains, including nearly $500 million allegedly linked to the Lazarus Group's hacking activities.
