The Blockchain Legal Institute (BLI) is closely monitoring the evolving regulatory landscape following the U.S. Treasury Department’s decision to remove Tornado Cash from its sanctions list on March 21, 2025. This marks a significant moment in the intersection of cryptocurrency and foreign policy enforcement.
Tornado Cash, an Ethereum-based cryptocurrency mixer, was initially sanctioned by the Office of Foreign Assets Control (OFAC) in August 2022 for allegedly facilitating over $7 billion in money laundering, including funds linked to North Korea’s Lazarus Group. However, a landmark ruling by the Fifth Circuit Court of Appeals in November 2024 found that OFAC had overstepped its authority by sanctioning immutable smart contracts, which cannot be considered “property” under U.S. law. This decision ultimately led to Tornado Cash’s delisting.
While the delisting is celebrated by many in the cryptocurrency industry as a victory for privacy and decentralization, the case highlights ongoing tensions between regulators and the rapidly evolving blockchain sector. OFAC’s actions underscore its commitment to adapting sanctions enforcement to emerging technologies, even as legal challenges test the limits of its authority.
The Blockchain Legal Institute will continue to provide insights and updates on this pivotal case and its implications for cryptocurrency regulation and policy development. Stay tuned for more analysis on how these decisions shape the future of decentralized finance and compliance frameworks.
US Treasury Removes Tornado Cash From OFAC Sanctions List
The Department of Treasury has lifted Sanctions on Tornado Cash, the Ethereum based smart contract mixer, following a series of legal defeats and administrative challenges.
“Based on the Administration’s review of the novel legal and policy issues raised by use of financial sanctions against financial and commercial activity occurring within evolving technology and legal environments, we have exercised our discretion to remove the economic sanctions against Tornado Cash as reflected in Treasury’s Monday filing in Van Loon v. Department of the Treasury,” the Treasury Department stated.
Tornado Cash was launched in 2019 as a decentralized protocol to enhance transaction privacy on Ethereum.
In August 2022, the mixer was added to the Office of Foreign Assets Control (OFAC) list, which includes sanctioned individuals and entities. U.S. law enforcement alleged that Tornado Cash facilitated over $7 billion in money laundering, including funds linked to North Korea’s Lazarus Group.
This led to a ban on U.S. persons using the service and legal action against its co-founders, Roman Storm and Roman Semenov, who were indicted in 2023 for money laundering tied to over $1 billion in transactions.
Six Tornado Cash users, backed by Coinbase, sued the Treasury, challenging the sanctions.
A Texas federal court ruled in January 2025 that the smart contracts couldn’t be sanctioned, a decision upheld by the Fifth Circuit in November 2024.
Today the Treasury officially lifted the sanctions, citing evolving legal and technological considerations, though it expressed concern about ongoing illicit crypto activities and reinforced its intent and authority to continue DPRK sanctions.