US Treasury Lifts Sanctions on Tornado Cash: Ethereum Mixer Service Resurrected
Tornado Cash, the Ethereum coin mixing service that was sanctioned by the US Treasury in 2022, has been officially removed from the Office of Foreign Assets Control (OFAC) sanctions list. The announcement on Friday capped a long-running period of tension over economic sanctions against the service.
The Treasury said in a statement that it decided to reverse the sanctions after reassessing the legal and policy factors involved in applying sanctions in the evolving financial technology environment. The decision was announced on Friday after the filing of Van Loon v. Treasury was released.
Tornado Cash and Legal Issues
In a November 2024 ruling, the U.S. Fifth Circuit Court held that the Treasury Department had exceeded its authority in sanctioning Tornado Cash’s immutable smart contracts. The court argued that smart contracts cannot be considered “property” that can be sanctioned under current law, since their immutable and autonomous nature does not allow for human intervention.
Following the ruling, Justice Department prosecutors requested a 60-day delay to allow time to respond, pushing OFAC’s deadline to March 17, 2025. During this time, Coinbase and many other organizations expressed their opposition to the sanctions against Tornado Cash, stressing that they were unfair and restricted users’ financial privacy.
Tornado Cash lawsuit still not over
While the sanctions against Tornado Cash have been lifted, the legal issues surrounding the service’s co-founder, Roman Storm, continue. Storm was arrested in 2023 and faces money laundering charges. After the sanctions were deemed excessive, a federal judge denied a request to dismiss the case against Storm.
Security concerns remain
The US Treasury in its latest statement stressed that it remains concerned about money laundering, particularly from North Korean hacker groups that have used cryptocurrency protocols to steal billions of dollars. However, the Treasury also acknowledged the importance of protecting the digital asset industry from abuse while encouraging innovation in the space.
Support from the blockchain community
After Tornado Cash was sanctioned in 2022, the Ethereum Foundation and blockchain developers expressed support for the service’s creators. In February 2025, the Ethereum Foundation donated $1.25 million to provide legal support to Alexey Pertsev, one of Tornado Cash’s core developers, to defend him against charges related to the software’s creation.
Ethereum co-founder Vitalik Buterin has also publicly voiced his support for Tornado Cash, revealing that he used the service to privately donate to Ukraine in its fight against Russia. Buterin and many others in the cryptocurrency community see the use of technologies like Tornado Cash as an important part of protecting financial privacy.
Lessons from Tornado Cash
The decision by the US Treasury to lift sanctions on Tornado Cash is seen as a significant milestone in the regulation of decentralized financial technologies. However, the case also highlights the challenges governments and regulators face when trying to balance protecting financial security with encouraging innovation.