Tornado Cash Officially Removed From Sanctions List, Treasury Issues Warning

The Office of Foreign Asset Control (OFAC) has officially lifted sanctions against Tornado Cash, removing the software from its Specially Designated Nationals and Blocked Persons List (SDN List). Using Tornado Cash had been illegal in the US since 2022.

The removal, announced by OFAC this morning, comes after the Fifth Circuit classified a lower court's decision to designate the Ethereum software as a sanctioned entity as unlawful last November, clarifying that software is not covered under the current design of the International Emergency Economic Powers Act (IEEPA).

The Treasury yet issued a stark warning for users of privacy services like Tornado Cash. "We remain deeply concerned about the significant state-sponsored hacking and money laundering campaign aimed at stealing, acquiring, and deploying digital assets for the Democratic People’s Republic of Korea (DPRK) and the Kim regime," the statement reads.

"Treasury remains committed to using our authorities to expose and disrupt the ability of malicious cyber actors to profit from their criminal activities through the exploitation of digital assets and the digital assets ecosystem," the statement continues.

"Treasury will continue to monitor closely any transactions that may benefit malicious cyber actors or the DPRK, and U.S. persons should exercise caution before engaging in transactions that present such risks," the Treasury warns.

The Treasury's sanctions against Tornado Cash were, in part, lifted because the Fifth Circuit had determined that both Tornado Cash and the Treasury would be "powerless" to stop North Korea from using the software due to its use of immutable smart contracts that cannot be altered.

Treasury Secretary Scott Bessent, who by many was welcomed for his favorable view of the digital assets space, noted that "securing the digital asset industry from abuse by North Korea and other illicit actors is essential to establishing U.S. leadership and ensuring that the American people can benefit from financial innovation and inclusion.”

While Tornado Cash's sanctions reversal is a cause to celebrate, the Fifth Circuit had also made clear that the reversal took place under the current interpretation of IEEPA, noting that Congress may choose to amend its definition to cover software such as Tornado Cash if deemed fit.

Additionally, many are now wondering whether Tornado Cash's removal from the SDN list will have consequences for the criminal prosecution of Tornado Cash developer Roman Storm, as well as on the proceedings against the developers of Samourai Wallet, who continue to be prosecuted by the Southern District of New York (SDNY).

Both Samourai Wallet developers Keonne Rodriguez and William Lonergan Hill are charged with conspiracy to commit money laundering and conspiracy to operate an unlicensed money service business. However, Samourai Wallet software has not been placed on OFAC's SDN list, and Samourai Wallet developers have not been charged with IEEPA violations, meaning that Tornado Cash's sanctions removal has little immediate effect on the criminal prosecution of Samourai Wallet developers.

As for the prosecution of Storm, the judge had previously denied a motion to reconsider the dismissal of the case against the developer based on the Fifth Circuit's sanctions reversal, arguing that much of the case rests on the development of the Tornado Cash user interface rather than the Tornado Cash smart contracts, which the Fifth Circuit had concerned itself with.

The case against Storm is heading for jury trial on April 14th in New York.

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*This article was updated on March 21 2025 at 5pm ET to correct charges against Samourai Wallet developers.