Tornado Cash Wins Big as U.S. Treasury Lifts Sanctions, But Legal Battles Remain

A major victory just landed for privacy advocates, open-source technology, and decentralized finance. The U.S. Treasury Department has officially lifted sanctions on Tornado Cash and its token, TORN. But while this is a huge step forward, the legal battle isn’t over yet.

What Just Happened?

Tornado Cash, a tool that allows people to make private transactions using cryptocurrency, was sanctioned by the U.S. government in 2022. Authorities claimed it was being used for money laundering, especially by bad actors linked to North Korea. This led to a major crackdown on privacy-focused crypto tools, with Tornado Cash’s developers and community members facing legal trouble.

Fast forward to March 21, 2025, and the Treasury has now removed these sanctions. This means that, at least on a regulatory level, Tornado Cash is no longer blacklisted by the U.S. government.

Today marks a huge victory for privacy, open source technology, and immutable, permissionless smart contracts. The U.S. Treasury Department has lifted the sanctions on https://t.co/mfFVsu3OSY and the TORN token: https://t.co/0cNOq5f1HT

A heartfelt thank you to everyone who…

— Roman Storm 🇺🇸 🌪️ (@rstormsf) March 21, 2025

Why Did They Reverse the Ban?

The Treasury says they reviewed the situation and decided to lift the sanctions after reconsidering how financial laws apply to evolving technologies like decentralized smart contracts. Essentially, they acknowledged that punishing an open-source tool might not have been the best approach.

However, they didn’t backtrack on their concerns about cybercrime. The government still warns that North Korea and other bad actors use digital assets to fund illegal activities, and they’re keeping a close eye on that.

How Does This Effect Crypto's Privacy

This decision sets a major precedent. It signals that regulators might be willing to take a more thoughtful approach toward privacy tools and decentralized finance (DeFi) instead of banning them outright.

For the crypto community, this is proof that pushing back against unfair policies can work. Many developers, advocates, and organizations fought against the Tornado Cash sanctions, arguing that privacy should not be criminalized. Their persistence seems to have paid off.

But the Legal Battle Isn’t Over Yet

Despite this huge win, there’s still a legal case against at least one person involved with Tornado Cash. Prosecutors in New York (SDNY) haven’t dropped their charges, meaning the fight in court is still ongoing.

This case could have long-term consequences. If the court sides with the government, it might still set a precedent that developers of privacy tools can be held legally responsible for how others use their software. On the other hand, if the charges are dismissed or if there’s an acquittal, it could strengthen the argument that open-source code should be free from legal liability.

What Happens Next?

The real test will be in court. Will this case set a dangerous precedent for open-source developers, or will it protect them?

For now, though, this is a moment to appreciate a win for financial privacy and decentralization. Whether this momentum carries forward remains to be seen. If you have any thoughts or feedback that you would like to share, you can write to team@etherworld.co or @ether_world

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