In what is being hailed as a ‘landmark’ decision by the crypto industry, a US court has reversed sanctions levied against Tornado Cash. The controversial crypto mixer is a Web3 platform that allows people to shuffle their crypto tokens with some other token from a collective pool of digital currencies. This adds more privacy to crypto transactions, making them difficult to be tracked or traced. The US Treasury’s Office of Foreign Assets Control (OFAC) levied sanctions against Tornado Cash in 2022 for enabling money launderers to move illegal funds and evade law enforcement agencies.
On January 21, the US District Court for the Western District of Texas reversed OFAC’s sanctions against Tornado Cash. An appeal was filed by six users of Tornado Cash against OFAC’s action that has led to this court ruling. “It is ordered and adjudged that the judgment of the district court is reversed, and the cause is remanded to the district court for further proceedings in accordance with the opinion of this court,” the ruling said.
The OFAC reportedly alleged that Tornado Cash was used by notorious North Korean hackers to launder funds amounting over $455 million (roughly Rs. 3,844 crore) which they acquired from crypto thefts and hacks. The OFAC had claimed that since its launch in 2019, the platform had facilitated the laundering of $7 billion (roughly Rs. 60,509 crore) until 2022.
Between 2022 and 2025, the blacklisting of Tornado Cash was criticised by the crypto sector, with many arguing that the technology of smart contracts that Tornado Cash uses to facilitate crypto swapping, is not its property which makes OFAC’s sanctions inapplicable under existing laws.
Alexey Pertsev, one of the three co-founders of Tornado Cash, was arrested in Netherlands, following OFAC’s sanctions. In May 2024, he was sentenced to 64 months in prison for money laundering.
My name is Roman Storm, and I am one of the founders of Tornado Cash, a non-custodial privacy protocol.
I am being prosecuted for writing open-source code that enables private crypto transactions in a completely non-custodial manner. This prosecution represents a terrifying…
— Roman Storm :us: :tornado: (@rstormsf) January 22, 2025
Last November, the Fifth Circuit Court in New Orleans overturned the 2022 sanctions against Tornado Cash. The platform’s co-founder Roman Storm is set to face trial on April 14.