Tornado Cash Sanctions Lifted; Developers Face Legal Trials
Tornado Cash, the Ethereum-based privacy mixer, was sanctioned by the U.S. Treasury in August 2022 over allegations of laundering more than $1 billion, including funds linked to the Lazarus Group. On March 21, 2025, a federal appeals court ruled that Tornado Cash’s core smart contracts are not “property,” prompting OFAC to lift its sanctions. Despite this reprieve, co-founders Alexey Pertsev and Roman Storm remain under legal scrutiny. Pertsev received a 5-year, 4-month sentence in the Netherlands in May 2024 for money laundering. In July 2025, a U.S. jury acquitted Storm of laundering charges but convicted him of operating an unregistered money transmission service, carrying up to a five-year prison term. The cases have reignited debates over open-source developer liability and the balance between privacy innovation and regulatory compliance. For crypto traders, the outcome could set a legal precedent affecting privacy tools and DeFi protocols, potentially shaping market sentiment around Ethereum-based mixers.
Neutral
The lifting of sanctions removes a major regulatory overhang for Tornado Cash and similar DeFi mixers, which could support positive sentiment around Ethereum privacy tools. However, ongoing prosecutions of core developers maintain legal uncertainty over DeFi privacy protocols. In the short term, traders may see limited upside as the market awaits clearer regulatory guidance. In the long term, the legal precedent on developer liability will influence innovation and compliance in DeFi. Overall, mixed signals suggest a neutral impact on ETH and related privacy protocol prices.