Tornado Cash Defies US Sanctions: $2.5 Billion Processed in 2025
Sanctions? What sanctions? The crypto mixer that regulators tried to kill just posted its biggest year yet.
The Unstoppable Protocol
While Treasury officials drafted press releases, code kept executing. Tornado Cash, the privacy tool blacklisted by the U.S. in 2022, processed a staggering $2.5 billion worth of transactions last year. The volume speaks louder than any compliance memo—decentralized protocols don't read the Federal Register.
Privacy in a Panopticon
The numbers reveal a brutal truth: demand for financial privacy is inelastic. When traditional off-ramps get surveilled, users flock to on-chain obfuscation. The mixer's smart contracts, immutable and permissionless, kept spinning while lawyers argued about control. It's the ultimate regulatory arbitrage—governments can sanction entities, but sanctioning math? Good luck.
The Compliance Charade
Here's the cynical finance jab: Wall Street banks launder billions annually, pay a fine that's a rounding error on their quarterly earnings, and get called "responsible corporate citizens." A piece of open-source software provides actual transparency—every transaction is on a public ledger—and gets treated like a nuclear proliferation network. The hypocrisy would be hilarious if it weren't so economically destructive.
The $2.5 billion figure isn't just a metric—it's a middle finger. It proves that in the war between sovereignty and software, code is winning. Regulators are playing chess while the blockchain plays a different game entirely. And judging by the volume, it's a game more people want to play every day.
How did regulators react to Tornado Cash?
The U.S. Treasury’s Office of Foreign Assets Control alleged that Tornado Cash facilitated money laundering of over $7 billion, including $455 million stolen by North Korea’s Lazarus Group, and has since prosecuted the founders, who to date are still fighting legal battles.
One of the founders, Alexey Pertsev, has already been sentenced to 64 months in prison. Cryptopolitan has reported that Roman Storm, another co-founder, is waiting to be sentenced, and the third co-founder is currently at large.
The sanctions placed on the platform resulted in a reduction in activity, but operations continued due to Tornado Cash’s decentralized architecture. The protocol has since then gained more notoriety as the go-to platform for people who want to obscure transactions for legitimate privacy reasons or bad actors who want to launder funds.
What’s the technology behind the privacy revolution?
The technological foundation enabling these privacy protocols lies in zero-knowledge proofs (ZKP), a cryptographic technique that allows verification of information without revealing the data behind it.
It was first proposed by some MIT researchers in 1985, and since then, ZKP technology has moved from just a theoretical concept to a practical infrastructure supporting billions in transactions.
In Tornado Cash’s operating mechanism, users deposit cryptocurrency into smart contracts that pool funds from multiple sources. When withdrawing to a different address, users provide zero-knowledge proofs that show their ownership without revealing which deposit originated the withdrawal.
This makes it very difficult for external observers to trace fund movements, effectively breaking the transparent audit trail that is usually a feature in most blockchain transactions.
The privacy protocol ecosystem has also grown beyond Tornado Cash. Railgun, frequently mentioned by ethereum founder Vitalik Buterin, saw net inflows of $1.4 billion in 2025, according to Bitrace.
Institutional players made considerable investments in privacy solutions in 2025, with Zcash receiving a lion’s share of those investments. The cryptocurrency, which is built with the same code as bitcoin but with an added layer of privacy, caught the attention of users who wanted more privacy in their transactions.
The Zcash token has since increased by over 750% year-to-date, with a market capitalization of over $6.45 billion.
Another privacy platform, Monero, also saw considerable investments and now has a market capitalization of over $9.1 billion. However, these platforms are not crypto mixers like Tornado Cash, which may also contribute to their appeal.
The compliance challenge for Web3 entities
The sanctions on Tornado Cash were lifted following a federal appeals court ruling that Immutable smart contracts do not qualify as property under US law, establishing that regulators lacked authority to sanction the software itself.
However, this has not brought an end to the ongoing litigation and conversations regarding the protocol.
The fundamental question facing the industry is whether privacy can be reconciled with regulatory requirements. The current trajectory points to growing adoption of zero-knowledge proof technology across legitimate use cases, from confidential business transactions to privacy-preserving identity verification.
However, there is also increased usage by bad actors, and that is what regulators and other industry stakeholders must find a way to address without throwing the baby out with the bathwater—in other words, solve without taking steps that affect legitimate users.
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