Texas Court Blocks Future Sanctions on Tornado Cash

A federal judge in Texas has ruled that the U.S. Treasury Department’s Office of Foreign Assets Control acted beyond its legal authority when it sanctioned the cryptocurrency mixer Tornado Cash, permanently barring the agency from reimposing such sanctions.

Judge Robert Pitman of the U.S. District Court for the Western District of Texas issued the decision on April 28, stating that OFAC’s designation of Tornado Cash’s smart contracts in August 2022 exceeded the agency’s statutory powers. The court’s ruling follows OFAC’s earlier action on March 21, 2025, when it officially removed Tornado Cash from its Specially Designated Nationals and Blocked Persons List, effectively lifting the sanctions.

The sanctions had been imposed on Tornado Cash for allegedly facilitating the laundering of over $7 billion in virtual currencies, including funds stolen by North Korea’s Lazarus Group. However, the court found that OFAC’s action against the platform’s autonomous smart contracts was not supported by the International Emergency Economic Powers Act , which governs the agency’s sanctioning authority.

In November 2024, the U.S. Court of Appeals for the Fifth Circuit had already determined that OFAC had overstepped its authority by sanctioning Tornado Cash’s immutable smart contracts, which do not qualify as “property” under federal law. This appellate decision laid the groundwork for the Texas district court’s subsequent ruling, which emphasized that OFAC cannot reimpose sanctions on Tornado Cash in the future.

Despite the lifting of sanctions, the legal challenges for Tornado Cash’s developers persist. Roman Storm and Roman Semenov, co-founders of the platform, were indicted in August 2023 by the U.S. Department of Justice on charges including conspiracy to commit money laundering, conspiracy to operate an unlicensed money transmitting business, and conspiracy to violate the IEEPA. The DOJ alleges that Tornado Cash was used to launder more than $1 billion in criminal proceeds, including hundreds of millions of dollars for the Lazarus Group.

Roman Storm was arrested in Washington State and is currently awaiting trial, scheduled for July 2025. Roman Semenov remains at large and has been added to OFAC’s sanctions list. Additionally, Alexey Pertsev, another developer associated with Tornado Cash, was arrested in the Netherlands in August 2022 and was sentenced in May 2024 to five years and four months in prison for money laundering.

The court’s decision has significant implications for the regulation of decentralized technologies. By ruling that OFAC cannot sanction autonomous smart contracts, the judgment underscores the challenges regulators face in applying traditional legal frameworks to decentralized platforms that operate without centralized control.