Key Takeaways
OFAC removed Tornado Cash from its sanctions list but maintained sanctions on its founder.
The removal stems from a court ruling that Tornado Cash’s smart contracts aren’t ‘property.’
The US Treasury’s Office of Foreign Assets Control (OFAC) has removed Tornado Cash, the prominent crypto mixing service, from its Specially Designated Nationals (SDN) List, while maintaining sanctions on one of its founders, Roman Semenov. The Department of Treasury announced the removal in a press release on Friday.
In its latest update, OFAC has removed several Ethereum (ETH) addresses linked to Tornado Cash from its SDN List, effectively ending US sanctions on those addresses.
Tornado Cash’s website and smart contracts had been blacklisted by the Treasury Department since August 2022 due to their alleged role in enabling extensive misuse by criminals for laundering stolen assets.
The authorities claimed that criminal organizations, including the notorious Lazarus Group, used the Ethereum-based mixing tool to launder over $7 billion in crypto assets as of August 2022.
Following the Treasury’s 2022 sanctions on Tornado Cash, users who claimed legitimate use of the tool and had their funds frozen, sued Treasury Secretary Janet Yellen, OFAC, and Director Andrea Gacki. Coinbase backed the lawsuit.
On November 26, 2024, the Fifth Circuit Court of Appeals ruled in favor of the plaintiffs, determining that OFAC exceeded its authority as Tornado Cash’s immutable smart contracts do not qualify as ‘property’ under the International Emergency Economic Powers Act.
“We hold that Tornado Cash’s immutable smart contracts (the lines of privacy-enabling software code) are not the “property” of a foreign national or entity, meaning they cannot be blocked under IEEPA, and OFAC overstepped its congressionally defined authority,” the court determined,” according to the ruling.
The Treasury Department announced its intent to remove Tornado Cash from the SDN List on March 18, 2025, with the delisting finalized by March 21, 2025.
OFAC also modified the designation for Semenov, who remains sanctioned. His listing no longer carries the cyber-enabled activities tag but maintains the North Korea-related designation.
Despite the platform’s delisting, Tornado Cash founders Roman Storm and Roman Semenov continue to face legal challenges. They were charged in August 2023 with money laundering and sanctions violations related to the platform’s operations.
