A federal judge in a US court has ruled this week that the government cannot reimpose sanctions on Tornado Cash, the controversial cryptocurrency mixing service, calling the US Treasury’s initial designation unlawful.
Tornado Cash vs US Treasury
The ruling was handed down by US District Judge Robert Pitman of the Western District of Texas. The ruling has been hailed as a victory for crypto privacy advocates and follows a prolonged legal battle over the Treasury’s attempt to regulate decentralized technologies.
Tornado Cash was initially sanctioned in 2022 by the Treasury’s Office of Foreign Assets Control (OFAC), which accused the platform of enabling money laundering, including by North Korean hackers. But last year, a federal appeals court found that OFAC had “overstepped” its legal authority by targeting the protocol’s autonomous smart contracts, which are basically software code that no entity controls.
OFAC formally removed Tornado Cash from its sanctions list in March 2025, citing policy considerations. But the move came only after the appellate court’s decision and before the lower court had issued its final judgment, a sequence that plaintiffs said was meant to sidestep legal accountability.
In court filings, lawyers for the six Tornado Cash users involved in Van Loon v. Treasury dismissed OFAC’s strategy as a “study in chaos,” accusing the government of trying to dodge an unfavorable ruling by declaring the case moot. They urged the court to issue a definitive judgment and permanently bar OFAC from reimposing sanctions on the protocol.
Judge Pitman agreed, writing in his opinion that OFAC had failed to assure the court it wouldn’t attempt to sanction Tornado Cash again in the future. He emphasized that the agency’s vague justifications for the delisting were insufficient and appeared designed to retain flexibility for future enforcement.
“Rather than acknowledge that the Fifth Circuit’s order required delisting Tornado Cash, Defendants state that they exercised their ‘discretion,’” Pitman said. He concluded that the case remained very much active and that OFAC’s designation of Tornado Cash was unlawful. The court permanently prompted the agency from re-listing the protocol under current statutes.
Despite this legal win for Tornado Cash’s users, the legal dilemma still persists. The Department of Justice is still pursuing criminal charges against Tornado Cash developers Roman Storm and Roman Semenov. Both were indicted in 2023 for conspiracy to launder money, operate an unlicensed money transmission business, and violate US sanctions. Semenov remains personally sanctioned by OFAC.
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