Tornado Cash Delisting: US Treasury Updates Sanctions
Tornado Cash Addresses Removed from US Blacklist
The US Treasury's Office of Foreign Assets Control (OFAC) has updated its sanctions list, removing several Ethereum (ETH) addresses associated with the cryptocurrency mixing service Tornado Cash. This action follows a court ruling that deemed Tornado Cash's smart contracts not to be 'property' under the International Emergency Economic Powers Act (IEEPA).
Key Takeaways:
- OFAC removed Tornado Cash addresses from its SDN List.
- Sanctions on founder Roman Semenov remain in place.
- The removal is a direct result of a court decision.
OFAC's decision effectively ends US sanctions against the specified Tornado Cash Ethereum addresses. This is a significant development, considering the platform's initial blacklisting in August 2022. At the time, the Treasury Department alleged Tornado Cash facilitated over $7 billion in cryptocurrency laundering by criminal organizations, including the Lazarus Group.
The 2022 sanctions led to legal challenges from users whose funds were frozen. Coinbase notably supported the lawsuit. A November 2024 ruling by the Fifth Circuit Court of Appeals sided with the plaintiffs, concluding that OFAC overstepped its authority by sanctioning the immutable smart contracts.
The court stated that Tornado Cash's smart contracts are not considered "property" under IEEPA, thus invalidating the basis for the sanctions. The Treasury Department officially announced the removal of Tornado Cash from the SDN list on March 21, 2025.
While the addresses are delisted, Roman Semenov, a Tornado Cash founder, remains under US sanctions. His designation has been modified, removing the cyber-enabled activities tag but retaining the North Korea-related designation. Semenov, along with another founder, Roman Storm, still faces criminal charges of money laundering and sanctions violations filed in August 2023.
This situation highlights the ongoing complexities and legal battles surrounding cryptocurrency regulation and the implications of sanctioning decentralized technologies. Codeum, a leader in blockchain security and development, provides crucial services such as smart contract audits, KYC verification, and custom smart contract development to help navigate the evolving landscape of blockchain regulations and mitigate risks.