U.S. Treasury Ends Tornado Cash Appeal as Sanctions Policy Shifts

Highlights:

• The Treasury Department withdraws its appeal over sanctions against Ethereum mixer Tornado Cash.
• A U.S. court vacates the judgment and orders the case dismissed following OFAC’s policy reversal.
• Roman Storm’s criminal trial on money laundering charges is set to begin on July 14 in New York.

The U.S. Treasury Department has ended its legal appeal involving Ethereum mixer Tornado Cash, closing a key sanctions enforcement case. The government’s policy reversal prompted both parties to file a joint motion for dismissal, which the court granted. However, criminal proceedings against developer Roman Storm remain active and scheduled.

Court Dismisses Case After OFAC Withdrawal

The Eleventh Circuit Court approved the motion to dismiss the case after the Office of Foreign Assets Control removed Tornado Cash from its sanctions list. OFAC had originally blacklisted the decentralized protocol in 2022, citing national security concerns. In March 2025, the Treasury reversed its position due to legal and technological complexities.

Coin Center and the Treasury agreed the case was moot, as enforcement actions had already ceased. The court’s action effectively erases prior rulings without further hearings. Bloomberg Law confirmed the dismissal, marking a significant policy shift.

Roman Storm to Stand Trial Despite Dismissals

Despite the dismissal of the civil appeal, Tornado Cash co-founder Roman Storm still faces trial on federal charges. The Department of Justice accuses him of conspiring to launder over $1 billion through the Tornado Cash platform. Prosecutors allege links to the Lazarus Group, a North Korean state-backed cybercrime organization.

Storm’s legal defense argues that the software’s smart contracts are immutable and beyond human control. Courts in the Netherlands rejected this argument during Alexey Pertsev’s trial, resulting in a 64-month sentence. U.S. judges have shown more openness to the free speech defense around software development.

Storm’s trial, scheduled for July 14, will test the legal boundaries of financial privacy tools. He faces up to 45 years in prison if convicted of all charges. The Ethereum Foundation has contributed $500,000 to support Storm’s legal defense.

Government Shifts Enforcement Priorities

Following OFAC’s removal of Tornado Cash from its sanctions list, the DOJ adjusted its crypto enforcement policies. A memo stated the government would not pursue cases involving decentralized software unless direct criminal intent is proven. The move reflects growing legal complexity in regulating open-source blockchain technologies.

Supporters argue that targeting code rather than conduct threatens innovation and violates basic rights. U.S. courts are now being asked to define the limits of responsibility for autonomous protocols. The outcome of Roman Storm’s trial could set a lasting precedent in crypto regulation.