U.S. Court Rules OFAC Sanctions Against Tornado Cash Were Unlawful

Tornado Cash has officially been cleared of U.S. sanctions after a Texas federal judge ruled that the Treasury Department’s Office of Foreign Assets Control (OFAC) unlawfully designated the crypto mixing service. The April 29 decision by Judge Robert Pitman follows a March delisting by OFAC, which came after a Fifth Circuit appeals court determined that the agency had exceeded its authority by sanctioning Tornado Cash’s smart contracts in 2022.

Although OFAC revoked the sanctions ahead of the district court’s ruling, it did so under its own discretion, not as a direct response to the appeals court. Plaintiffs in the Van Loon v. Treasury case, all Tornado Cash users, pushed back against the government’s claim that the matter was moot. Their legal team argued that OFAC’s approach left open the possibility of future sanctions, calling it an effort to avoid legal defeat.

Judge Pitman agreed, stating that the government offered no assurance it wouldn’t reissue the sanctions. He permanently blocked OFAC from enforcing them, emphasizing that the agency failed to comply with the appellate court’s order.

Despite this victory, Tornado Cash’s developers Roman Storm and Roman Semenov still face criminal charges from the Department of Justice (DOJ). Semenov remains on OFAC’s sanctions list. However, a recent DOJ memo from Deputy Attorney General Todd Blanche suggests a policy shift, advising against prosecuting crypto platforms for the actions of users or unintentional regulatory violations.

The ruling has sparked wider debate, with crypto leaders urging President Trump to end what they describe as the Biden-era DOJ’s “lawless” crackdown on open-source software. Industry advocates see the court’s decision as a pivotal moment for DeFi rights and privacy tech development.