For nearly three years, touching this mixer — even unknowingly — could freeze your funds indefinitely. A federal appeals court, and then the Treasury itself, ended that.
What Happened, and Why It Matters Now
In August 2022, OFAC (the Treasury's Office of Foreign Assets Control) added Tornado Cash — a privacy-focused Ethereum mixing protocol — and dozens of its associated wallet addresses to the Specially Designated Nationals (SDN) list, alleging the protocol had laundered over $7 billion, including funds tied to North Korea's Lazarus Group. The practical effect for ordinary users: any US person whose wallet had ever interacted with Tornado Cash — even through a small, unsolicited "dust" transaction they never requested — risked having exchanges freeze their accounts or block withdrawals, out of caution about sanctions exposure.
That sanctions designation no longer exists. On 21 March 2025, OFAC formally removed Tornado Cash and its associated addresses from the SDN list.
Why: The Van Loon Ruling
The delisting followed a Fifth Circuit Court of Appeals ruling in Van Loon v. Department of the Treasury (26 November 2024). The court held that Tornado Cash's smart contracts — being immutable, open-source code with no controlling person or entity — are not "property" that OFAC has statutory authority to block under the International Emergency Economic Powers Act (IEEPA). In plain terms: you can sanction a person or organization, but the court found OFAC couldn't sanction self-executing code that nobody controls.
Rather than continue litigating, the Treasury exercised its discretion in March 2025 to remove the sanctions entirely, rather than pursuing further appeals or a narrower re-designation.
What Changed, and What Didn't
Changed: the Tornado Cash protocol and its associated wallet addresses are no longer on the SDN list. US persons are no longer categorically prohibited from interacting with the Tornado Cash smart contracts themselves.
Did not change: individual people can still be sanctioned or prosecuted for their own conduct. Tornado Cash co-founder Roman Semenov remains on the SDN list specifically under North Korea-related sanctions (his cyber-related designation was separately removed, but the North Korea designation stands). Separately, and distinctly from the OFAC sanctions question, co-founder Roman Storm was criminally prosecuted for money laundering-related charges tied to the protocol — a criminal case is a different legal track entirely from the civil sanctions list, and the delisting doesn't affect it.
If Your Wallet Was Frozen During the Sanctions Period
If an exchange froze your account or blocked a withdrawal between August 2022 and March 2025 specifically because of Tornado Cash exposure, the underlying legal basis for that restriction no longer exists. This doesn't mean funds are automatically released — exchanges still run their own independent compliance processes, and a freeze imposed for that reason should now be revisited given the delisting, but you may still need to formally request that reassessment rather than assume it happens automatically.
If you're still facing a restriction that traces back to this issue, generate a formal response letter to the exchange referencing the March 2025 delisting directly, and requesting a specific update on your account's status in light of it.
Related Kibbo Tools
- Exchange Account Freeze/Lockout Response Letter →
- Frozen Account Response Checklist →
- Crypto Regulators (Directory) →
Sources
- Office of Foreign Assets Control — FAQ 1079 and related Tornado Cash guidance. ofac.treasury.gov
- Van Loon v. Department of the Treasury, 24-40705 (5th Cir. Nov. 26, 2024).