Tornado Cash

Overview

Tornado Cash is a decentralized cryptocurrency mixer on Ethereum whose privacy contracts were the first open-source code the U.S. Treasury ever sanctioned, in 2022 — and whose March 2025 delisting followed a federal appeals court’s landmark ruling that immutable smart contracts are not sanctionable “property.” (U.S. Treasury; Sidley)

Launched in 2019 by Roman Storm, Roman Semenov, and Alexey Pertsev as a financial-privacy tool, it lets users deposit cryptocurrency into pools and withdraw it from a different address, breaking the visible chain of custody and anonymizing the origin, recipient, and movement of assets. (Mayer Brown) In August 2022, Treasury’s Office of Foreign Assets Control (OFAC) sanctioned it, alleging the mixer had laundered more than $7 billion in virtual currency since 2019, including over $455 million stolen by North Korea’s Lazarus Group. (Slaughter and May) The designation did not survive the courts: in November 2024 the Fifth Circuit held that OFAC had exceeded its authority, and in March 2025 Treasury removed Tornado Cash from the sanctions list. (Sidley; U.S. Treasury) In parallel, the developers were prosecuted as people: Pertsev was convicted of money laundering in the Netherlands in May 2024, and Storm was convicted in New York in August 2025 on one conspiracy count with a jury deadlock on two more. (CoinDesk; Mayer Brown)

How the protocol works

The mixer runs on “pool smart contracts”: a sender deposits cryptocurrency in a fixed denomination (0.1, 1, 10, or 100 ETH) and receives a cryptographic password entitling its holder to withdraw the same amount. Because each pool holds many users’ deposits, mixing severs the public link between any deposit and withdrawal address. (Sidley) Withdrawals use zero-knowledge proofs: the user proves they own a valid deposit without revealing which one. The protocol is non-custodial — the contracts hold the funds — and was governed by a DAO of TORN token holders. (Mayer Brown)

In 2020 the project irreversibly converted its pool contracts to immutable status: self-executing code that no one — not even the original developers — could alter, remove, or control. That irrevocability became the center of the Fifth Circuit’s legal analysis. (Sidley)

The sanctions arc, 2022–2025

On August 8, 2022, OFAC placed Tornado Cash on the SDN list, barring U.S. persons from using it — the stated basis being more than $7 billion allegedly moved since 2019, including $455 million tied to North Korea’s Lazarus Group. (Slaughter and May; Mayer Brown) The target was code, not people, and backlash followed: Ethereum co-founder Vitalik Buterin had publicly said he used the mixer to send money to Ukraine to avoid Russian government scrutiny. (Slaughter and May)

Six users sued the Treasury Department (Van Loon v. Department of the Treasury), arguing the sanctions exceeded OFAC’s authority under IEEPA — immutable contracts are not “property,” Tornado Cash is not a “person,” and no one holds a property “interest” in the code. The district court granted Treasury summary judgment; the Fifth Circuit reversed on November 26, 2024. (Sidley)

On March 21, 2025, OFAC removed Tornado Cash and 100-plus Ethereum addresses from the SDN list — a discretionary act on “novel legal and policy issues,” not a concession of error. Secretary Scott Bessent said the U.S. must “secure the digital asset industry from abuse by North Korea and other illicit actors.” (U.S. Treasury; CoinDesk) The TORN token jumped 40 percent on the news. (CoinDesk)

What the Van Loon ruling did — and did not — decide

The holding is narrower than the headlines. The Fifth Circuit’s core finding: immutable smart contracts are not “property” under IEEPA, because property must be capable of being owned — and immutable code, by definition, is incapable of being owned: no one can update, remove, or control it, or exclude anyone else from using it. (Sidley) The contracts were not “contracts” either — a contract needs two parties, while immutable code is “just software code” with no operator on the other side — nor “services,” which require human effort. (Sidley)

Crucially, the ruling left OFAC’s sanctions on Tornado Cash’s mutable contracts standing, and it binds only the Fifth Circuit. And although decided after Chevron deference ended (Loper Bright), Sidley notes challenging OFAC designations remains hard, since courts still defer to the executive on national-security fact-finding. (Sidley) As Judge Katherine Polk Failla later told Storm’s lawyers: whether or not Tornado Cash itself was sanctioned “does not affect the sanctions Defendant allegedly conspired to violate (those on the Lazarus Group).” (CoinDesk) The technology was delisted; the people behind it are still being prosecuted.

The criminal cases against its developers

While the sanctions fight ran on one track, criminal cases ran on another. In the Netherlands, Alexey Pertsev was convicted of money laundering at the ‘s-Hertogenbosch court in May 2024 and sentenced to 64 months; the verdict held Tornado Cash itself “executed the concealing and disguising activities” of money laundering, and Pertsev applied to appeal. (CoinDesk)

In August 2023, the Justice Department indicted Roman Storm and Roman Semenov on three conspiracy counts — money laundering, operating an unlicensed money transmitting business, and violating IEEPA sanctions; Semenov remains wanted and at large. (Mayer Brown) At Storm’s summer-2025 trial in the Southern District of New York, both sides agreed he had not laundered funds himself, knew criminals used the mixer, and that it also served legitimate uses; the fight was over intent — knowingly running a money-laundering machine, per prosecutors, versus building a neutral tool others misuse, like a VPN or a hammer, per the defense. (Mayer Brown) On August 6, 2025, the jury returned a split verdict: guilty on the unlicensed-money-transmission conspiracy (up to five years), deadlocked on money laundering and sanctions conspiracy (up to 20 years each). Post-trial motions and a possible retrial kept the outcome fluid. (Mayer Brown) The trial unfolded amid a Justice Department policy shift: an April 2025 “Ending Regulation by Prosecution” memo from Deputy Attorney General Todd Blanche said the department would stop charging digital-asset regulatory violations like unlicensed money transmitting. (Mayer Brown)

Two parallel legal tracks

	Sanctions track	Criminal track
Target	The software — Tornado Cash’s contracts and addresses	The developers as people
Opening move	OFAC SDN designation, August 8, 2022	DOJ indictment of Storm and Semenov, August 2023; Pertsev tried in the Netherlands
Turning point	Fifth Circuit, November 26, 2024: immutable contracts are not “property”	April 2025 DOJ memo curbing “regulation by prosecution” of crypto
2025 outcome	Delisted from the SDN list, March 21, 2025, as a discretionary act	Storm convicted on one count, hung jury on two (August 2025); Pertsev convicted May 2024
What remains	Caution warning stands; mutable-contract sanctions upheld	Retrial decisions and appeals pending

Tornado Cash in the World Liberty Financial report

In September 2025, Accountable.US’s “American Sell-Out” report on World Liberty Financial — the Trump-family-linked crypto venture — stated the firm sold tokens to 62 users who had previously used Tornado Cash, while acknowledging it eventually blocked 272 wallets after the initial sales. (Bitcoin.com) These are the report’s allegations, not adjudicated findings; see the related profile on World Liberty Financial.

FAQ

Is Tornado Cash still sanctioned? No. On March 21, 2025, OFAC removed Tornado Cash and 100-plus Ethereum addresses from the SDN list, after the Fifth Circuit ruled immutable smart contracts are not sanctionable “property” under IEEPA. (U.S. Treasury) Treasury stressed it was discretionary, not a concession the designation was wrong.

How does Tornado Cash actually work? Users deposit cryptocurrency in fixed denominations (0.1, 1, 10, or 100 ETH) into a shared pool and receive a cryptographic password. Later, they use zero-knowledge proofs to prove they own a valid deposit — without revealing which one — and withdraw from a fresh address, severing the public link between deposit and withdrawal. (Sidley)

What happened to Tornado Cash’s developers? Alexey Pertsev was convicted of money laundering by a Dutch court in May 2024 and sentenced to 64 months; he applied to appeal. (CoinDesk) Roman Storm was convicted by a New York jury in August 2025 of conspiring to operate an unlicensed money transmitting business, with a deadlock on the money laundering and sanctions counts. (Mayer Brown)

Why was Tornado Cash delisted if its developers are still being prosecuted? Because the two tracks target different things. The Fifth Circuit ruled that immutable software code cannot be “property” OFAC may block — a statutory limit on sanctions against autonomous technology. (Sidley) The criminal cases allege the developers’ own conduct — knowingly operating and promoting a money-laundering channel — which the delisting does not exonerate. (Mayer Brown)

What this profile does not claim

This profile is about Tornado Cash the crypto mixer, not tornadoes — the weather phenomenon. It treats Treasury’s “$7 billion laundered” figure as an allegation in the sanctions designation, not an adjudicated finding; Storm’s defense contended most funds passing through the mixer were not linked to criminal activity. It does not claim the Van Loon ruling exonerated the developers or legalized the mixer worldwide — the court explicitly left sanctions on mutable contracts standing. It does not assert the reported April 2025 permanent injunction against re-sanctioning, because no fully-read source verified it. And it presents Accountable.US’s September 2025 allegations about World Liberty Financial as the watchdog’s findings, not proven facts.