https://www.moneylaundering.com/news/in-notable-reversal-ofac-abandons-designation-of-tornado-cash/

U.S. officials disclosed Friday that they had lifted financial restrictions from Tornado Cash, a notorious, decentralized mixing service accused of laundering more than $7 billion of cryptocurrency for North Korean-sponsored hackers and other criminals since 2019.

The restrictions, which the Office of Foreign Assets Control imposed in November 2022, barred U.S. financial institutions and parties from interacting with any “property” linked to dozens of digital addresses on the Ethereum blockchain that, according to the agency, Tornado Cash used to blend cryptocurrencies into nearly untraceable combinations.

OFAC explained that Friday’s decision reflects recent developments in the 5th U.S. Circuit Court of Appeals, which ruled in November that the open-source software targeted by the restrictions does not constitute property under the International Emergency Economic Powers Act.

Attorneys for the agency argued prior to the ruling that the concept of property under IEEPA covers not only tangible items such as cash, cars, real estate and bank accounts, but also intangible items such as contracts and services.

“Treasury will continue to monitor closely any transactions that may benefit malicious cyber actors or the DPRK [Democratic People’s Republic of Korea], and U.S. persons should exercise caution before engaging in transactions that present such risks,” OFAC stated Friday.