Tornado Money, a cryptocurrency mixer accused of allegedly facilitating the laundering of stolen funds by North Korean state hackers, has been removed from the US sanctions list.
This decision follows a November appellate court ruling that determined the US Treasury Department had exceeded its authority in imposing sanctions on the platform.
Tornado Money Sanctions Lifted
Tornado Money had been on the Specially Designated National and Blocked Individuals (SDN) list since 2022, accused of laundering greater than $455 million in cryptocurrency stolen by hackers related to North Korea.
The Treasury’s sanctions were a part of broader efforts to combat state-sponsored hacking and cybercrime, particularly in relation to the Democratic People’s Republic of Korea (DPRK). Nonetheless, a federal appeals court present in November that the Treasury’s actions violated legal boundaries.
The court ruled that the smart contracts that underpin Tornado Money—essentially immutable lines of code on the blockchain—don’t qualify as property under the International Emergency Economic Powers Act (IEEPA), the law typically used to freeze assets for national security reasons.
Following the court’s decision, the Treasury Department announced on Friday that it might drop the sanctions against Tornado Money. In its statement, the department acknowledged the appellate court’s ruling while framing its decision as a vital review of the legal and policy challenges posed by financial sanctions within the digital age.
Treasury Secretary Scott Bessent emphasized the importance of securing the digital asset industry from abuse while also recognizing the innovation potential of those technologies. Bessent stated:
We remain deeply concerned in regards to the significant state-sponsored hacking and money laundering campaign geared toward stealing, acquiring, and deploying digital assets for the DPRK and the Kim regime.
‘Historic Win For Crypto’
The choice has been met with mixed reactions. Coinbase, a serious cryptocurrency exchange financially backing the legal challenge, celebrated the ruling as a “historic win for crypto.”
A Coinbase representative argued that blocking open-source technology attributable to the actions of just a few bad actors is just not what Congress intended when it authorized financial regulations.
Despite the lifting of sanctions, Tornado Money’s operations have continued even under scrutiny. Research indicates that North Korean hackers still utilize the platform to launder significant amounts of stolen cryptocurrency.
The Treasury previously accused Tornado Money of laundering over $7 billion since its inception in 2019, emphasizing the continued challenges in regulating decentralized financial systems.
Legal actions are still in motion against Tornado Money’s co-founders. Roman Storm was arrested in Washington state in 2023, while his co-founder, Roman Semenov, stays at large and on the US sanctions list.
Moreover, a Dutch court recently sentenced a Tornado Money developer, Alexey Pertsev, to over five years in prison for his involvement in money laundering activities.
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