The US charges two founders of Tornado Cash and sanctions Roman Semenov

On August 23, 2023, the United States Department of Justice unsealed an indictment against Roman Storm and Roman Semenov, co-founders of Tornado Cash. The charges against Tornado Cash founders included conspiracy to launder money, violate sanctions and operate an unlicensed money transmission business. Storm was detained and Semenov remained out of reach of authorities.

That same day, the Office of Foreign Assets Control (OFAC) sanctioned Semenov for his alleged material support to the mixer and operations related to the North Korean group Lazarus. Criminal accusation and administrative designation were different procedures, with their own standards and consequences.

What the prosecution alleged about Tornado Cash

Prosecutors claimed the service facilitated more than $1 billion in laundering operations, including amounts linked to Lazarus. Tornado Cash pooled deposits and allowed withdrawals to new addresses, making it difficult to publicly connect the source and destination on Ethereum.

The theory was not limited to the defendants having written code. The indictment described development, promotion, governance, an interface and a network of relays, in addition to decisions subsequent to knowledge of illicit uses. According to the Government, they maintained the capacity and economic incentives to improve controls and continued to provide the service.

The defense argued that immutable smart contracts worked without custody and that processing messages through software was not the same as transmitting money like a traditional intermediary. That discussion about effective control became the legal center: who receives funds, who can stop the operation and what elements of the protocol remain managed.

Code, operation and criminal liability

Publishing software is protected in many contexts and does not in itself constitute money laundering. Criminal responsibility requires additional elements, including knowledge and intention depending on each crime. The case raised whether the design, maintenance and benefit of a protocol could demonstrate participation in a service deliberately used to move criminal funds.

The conspiracy charges also did not require that each transaction be unlawful. The prosecution had to prove the required agreement and mental state, not criminalize any user who sought privacy. The existence of legitimate uses could be relevant, but would not automatically exclude liability for facilitating known transactions.

For DeFi developers, the filing showed that decentralizing one part of the contract does not solve all functions. Interface, governance, keys, commissions, relays and communication with users must be analyzed separately. Control may be reduced over time, but previous actions remain important.

The relationship between sanctions and criminal proceedings

OFAC had already designated Tornado Cash in 2022. The individual sanction against Semenov added prohibitions on his assets and interests subject to US jurisdiction. A designation freezes and prohibits transactions; It is not a criminal conviction and can be challenged under the Treasury’s statutory powers.

The accusation of violating sanctions required proof of conduct during the corresponding period. Therefore, a subsequent change to the list does not automatically delete historical charges. Likewise, withdrawing an administrative designation does not resolve whether money transmission or laundering occurred.

Outlook from 2026

The Treasury removed Tornado Cash from the sanctions list on March 21, 2025 after reviewing the legal and policy issues raised. In August 2025, a jury found Storm guilty of conspiring to operate a money transmission business without a license, a crime carrying a maximum sentence of five years. It did not reach unanimity on money laundering or on conspiracy to violate sanctions.

In March 2026, the prosecution requested a repeat trial on those two unresolved charges in October. As of August 2026, that repetition was still pending and Storm’s challenge to the conviction obtained had not been closed either. The correct description is, therefore, partial: there is a conviction for the transmission of money; the accusations of money laundering and sanctions had no verdict; and OFAC’s removal of Tornado Cash did not by itself nullify the criminal proceedings.