The U.S. Treasury has removed economic sanctions imposed on Tornado Cash, a company that specializes in cryptocurrencies to enhance transaction privacy. Initially, the Biden administration had accused Tornado Cash of aiding in the laundering of over $7 billion for North Korean and other cyber hackers.

The Treasury's Office of Foreign Assets Control blacklisted Tornado Cash in 2022 due to suspicions of facilitating the laundering of cybercrime proceeds, which included funds stolen by Lazarus, a North Korean government-supported hacking organization.

Despite a lawsuit challenging the sanctions by six Tornado Cash users, supported by Coinbase, a U.S. appeals court had upheld the sanctions. However, after considering legal and policy aspects related to using sanctions in advancing technology and legal landscapes, the Treasury has decided to rescind the sanctions.

Nevertheless, the Treasury remains vigilant regarding North Korea's illicit activities, such as state-sponsored hacking and money laundering, utilizing stolen digital assets for government funding.

Treasury Secretary Scott Bessent emphasized the importance of protecting the digital asset industry from exploitation by North Korea and other illicit entities for promoting U.S. leadership in financial innovation and inclusion. President Donald Trump has been actively working on revamping U.S. cryptocurrency policies and recently took steps to establish a strategic reserve of cryptocurrencies, hosting an industry summit at the White House.

In a separate incident, two co-founders of Tornado Cash were charged with facilitating over $1 billion in money laundering, including for the Lazarus Group. One co-founder, Roman Storm, is awaiting trial and denying any involvement in criminal activities. Additionally, a developer of Tornado Cash, Alexey Pertsev, was sentenced to five years and four months in prison in the Netherlands last May for money laundering.