How Tornado Cash Usage Has Changed Since Sanctions Were Lifted

Once a focal point of the crypto privacy debate, Tornado Cash has recently returned to the spotlight—this time under very different circumstances. In March 2025, the U.S. Treasury lifted sanctions on the Ethereum-based mixing service, marking a dramatic policy reversal after years of regulatory scrutiny. Originally sanctioned in 2022 for allegedly facilitating money laundering, Tornado Cash had become emblematic of the tension between blockchain anonymity and financial oversight. Now, with the ban lifted, crypto participants are watching closely.

In this blog, we look at how Tornado Cash works, its history of sanctions, and how its usage has shifted since the sanctions were lifted.

What is Tornado Cash and How Does it Work?

Tornado Cash functions as a decentralized, non-custodial privacy protocol deployed on the Ethereum (ETH) blockchain. Its core purpose is to break the inherent on-chain link between the source and destination addresses involved in cryptocurrency transactions.

When a user wishes to obscure a transaction, they deposit their crypto into one of Tornado Cash’s designated smart contracts. These contracts pool the deposited funds. At a later point, the user can withdraw an equivalent amount of the deposited asset to a new unrelated address.

By pooling funds and employing cryptographic zero-knowledge (ZK) proofs, the protocol ensures that it becomes computationally infeasible for external observers to definitively trace the path of funds from the original depositing address to the final withdrawal address. This significantly hinders efforts to track the flow of funds and identify the individuals or entities behind the transactions.

The Beginning of Tornado Cash’s OFAC Sanctions

Launched in 2019, Tornado Cash quickly became the most well-known Ethereum-based mixer. It was widely used by normal users seeking anonymity, but also attracted malicious actors. Because of its open-source nature and non-custodial design, no central authority could control Tornado Cash once it was deployed. This lack of oversight became a key concern for regulators, who began to see the protocol as a potential tool for illicit activity.

In August 2022, the U.S. Office of Foreign Assets Control (OFAC) sanctioned Tornado Cash, citing its alleged role in laundering more than $1 billion in illicit funds, including proceeds from North Korean-linked cyberattacks orchestrated by the Lazarus Group. The sanctions marked a turning point in crypto history, as it was the first time a piece of open-source software had been added to the Specially Designated Nationals (SDN) sanctions list.

But despite the crackdown, the Tornado Cash smart contracts themselves remained live on-chain. Tornado Cash couldn’t be “switched off.”

Post-sanctions Usage Trends

Following the announcement on March 21, 2025 of the sanctions being lifted, Tornado Cash’s native token, TORN, rose significantly, going from around $8 to approximately $15 per token.

Fluctuations in sanctions on Tornado Cash appear to have had negligible influence on exploiters' use of the platform for laundering funds.

During restrictions, the service primarily attracted two groups:

1. technically sophisticated privacy advocates willing to accept legal risk;
2. and illicit actors undeterred by sanctions.

With legal barriers removed, the protocol is likely experiencing an influx of more risk-averse legitimate users seeking enhanced transaction privacy.

Despite the lifting of sanctions, the Treasury Department warned it “will continue to closely monitor any transactions that may benefit malicious cyber actors or the DPRK,” and advised U.S. citizens to “exercise caution before engaging in transactions that present such risks.”