US Treasury Removes Tornado Cash Addresses from Blacklist, Maintains Sanctions on Developer
The US Treasury's Office of Foreign Assets Control (OFAC) has made a significant move in its ongoing efforts to combat illicit activities in the cryptocurrency space. In a press release announced on Friday, the Department of Treasury revealed that it has removed several Ethereum addresses linked to Tornado Cash, a prominent crypto mixing service, from its Specially Designated Nationals (SDN) List.
This decision effectively ends US sanctions on those addresses, which had been blacklisted by the Treasury Department since August 2022 due to their alleged role in facilitating extensive misuse of the platform for laundering stolen assets. The authorities claimed that criminal organizations, including the notorious Lazarus Group, used Tornado Cash's 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 Roman 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. This is a developing story. We'll update as we learn more.
What Does This Mean for Tornado Cash Users?
The removal of addresses from the SDN List has significant implications for users who previously had their funds frozen due to alleged misuse of the platform. As long as these users can demonstrate legitimate use of Tornado Cash, they should no longer face sanctions or have their assets frozen.
Next Steps
The Treasury Department's decision marks a significant turning point in the ongoing saga surrounding Tornado Cash and its role in facilitating illicit activities. With the removal of addresses from the SDN List, users can now breathe a sigh of relief. However, the case is far from over, with Roman Semenov and his co-founder facing ongoing legal challenges.