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The Tornado Cash case
In August 2022, US OFAC sanctioned Tornado Cash — adding the protocol's smart-contract addresses to the Specially Designated Nationals (SDN) list, citing laundering of over $7B including DPRK-linked funds. It was unprecedented: never before had immutable, self-executing code been treated as a sanctionable “entity.” US persons were prohibited from interacting with the contracts; some users had innocent funds frozen in the mixer.
In November 2024, a US federal court (Fifth Circuit) ruled that immutable smart contracts are not “property” under the International Emergency Economic Powers Act (IEEPA) — they aren't owned by anyone and can't be “blocked.” On March 21, 2025, OFAC removed Tornado Cash from the SDN list. The case is a landmark on the limits of crypto sanctions, but it does not make mixer use safe: individual users can still face money-transmitter or AML charges, and regulated firms must still treat interactions with mixers as high-risk.
The Tornado Cash delisting narrows one theory of sanctions liability for immutable contracts; it does not legalize money laundering, and it does not address the many other theories (money transmitting without a license, AML failures, etc.) under which mixer users and operators have been prosecuted. For any real decision, consult qualified counsel.