Treasury’s Tornado Cash Sanctions Have Companies Stepping Back From Users

The Treasury Department alleges North Korea-backed hacking organization Lazarus Group used Tornado Cash to launder more than $455 million in stolen crypto

article-image

Source: DALL·E

share

key takeaways

  • The US Treasury Department sanctioned Tornado Cash and related wallets Monday, prompting some companies to suspend accounts and freeze assets
  • Roman Semenov, one of the three founders of Tornado Cash, said his GitHub account was suspended

In the hours after the US Treasury imposed its first-ever sanction against an on-chain decentralized finance protocol, Tornado Cash users and supporters took to Twitter to vent their frustrations. 

The Office of Foreign Asset Control added Tornado Cash and 45 related Ethereum wallet addresses to the Specially Designated Nationals (SDN) list, meaning their “assets are blocked and U.S. persons are generally prohibited from dealing with them,” according to the Treasury

Read more: Coin Mixers and Privacy Coins: Can They Resist Censorship?

The Treasury alleges North Korean-backed hacker collective Lazarus Group, which in May allegedly stole $625 million from Ethereum-linked sidechain Ronin Network, used Tornado Cash to launder more than $455 million in stolen crypto.

Tornado Cash repositories were removed from GitHub, an internet hosting service and grant provider for software development, following the sanction announcement, according to the now-deactivated webpage.

“My GitHub account was just suspended,” Roman Semenov, one of the three founders of Tornado Cash, tweeted Monday. “Is writing an open source code illegal now?” 

In what would appear to be the first time a pool has been frozen — as opposed to an individual account — Circle has also frozen 75,000 USD Coin stablecoins belonging to Tornado Cash users, according to one Twitter account.

Crypto advocacy group Coin Center criticized the Treasury’s move to sanction Tornado Cash, saying it is just a technology that could be used by good or bad actors, in a statement

“How is adding Tornado.cash to the SDN list different from past OFAC actions?” the statement added. “A smart contract is a robot, not a person.”

Although the circumstances are different, it’s not the first time the crypto industry has dealt with fast-moving US sanctions. 

In February, following Russia’s invasion of Ukraine, sweeping sanctions against Russian entities prompted many crypto exchanges to consider blocking Russian users to comply with US sanctions laws. Exchanges Binance and Coinbase later blocked accounts associated with sanctioned Russian individuals and companies, a move that may have disappointed some digital asset enthusiasts but did not surprise legal experts. 

Sanctions laws are clear, Yankun Guo, partner at law firm Ice Miller, told Blockworks at the time.

“A US company using crypto to sidestep sanctions with Russia will be in violation of US laws. It is as simple as that,” Guo said.


Get the news in your inbox. Explore Blockworks newsletters:

  • Blockworks Daily: The newsletter that helps thousands of investors understand crypto and the markets, by Byron Gilliam.
  • Empire: Start your morning with the top news and analysis to inform your day in crypto.
  • Forward Guidance: Reporting and analysis on the growing intersection of crypto and macroeconomics, policy and finance.
  • 0xResearch: Alpha directly in your inbox. Market highlights, data, degen trade ideas, governance updates, token performance and more.
  • Lightspeed: Built for Solana investors, developers and community members. The latest from one of crypto’s hottest networks.
  • The Drop: For crypto collectors and traders, covering apps, games, memes and more.
Tags

Upcoming Events

Javits Center North | 445 11th Ave

Tues - Thurs, March 18 - 20, 2025

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

Industry City | Brooklyn, NY

TUES - THURS, JUNE 24 - 26, 2025

Permissionless IV serves as the definitive gathering for crypto’s technical founders, developers, and builders to come together and create the future.If you’re ready to shape the future of crypto, Permissionless IV is where it happens.

Old Billingsgate

Mon - Wed, October 13 - 15, 2025

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

recent research

Unlocked by Template Presentation.jpg

Research

The Solana validator landscape has changed drastically over the past year. The chain now has 1,332 active validators with 380.9 million SOL staked (63.9% of supply) as of February 2025. Validator revenue had diversified beyond inflationary rewards (still making up 55%) to include Jito tips (30%), priority fees (24%), and base fees (<1%), in January, especially with the increased activity on Solana. Since then, issuance has become dominant again (76%), while Jito tips (14%), priority fees (9%), and base fees (less than 1%) have reduced in share of February 2025. There has been a strong shift towards non-inflationary revenue sources, which have become more central to validator economics as priority fees and off-chain blockspace auctions gain traction. Client diversity has also improved drastically, with implementations such as Agave, Jito-Solana, and Frankendancer already in use, and upcoming clients like Firedancer and Sig expected to further strengthen resilience and reduce reliance on a single codebase.

article-image

BWR analyst Carlos Gonzalez Campo explains the consequences of SOL inflation and transfers lost to “leaky buckets”

article-image

Empire co-host Santiago Santos makes the case that memecoins have actually helped push infra forward…just not in the way you think

article-image

A16z Crypto lists seven buckets for tokens and recommendations for how to regulate them, in a filing submitted to the SEC

article-image

New model aims to resolve trading inefficiencies with a single execution layer and market maker changes

article-image

Investors navigating BTC face short-term unpredictability, influence from other markets

article-image

The GENIUS Act aims to establish regulatory guidelines for stablecoins