# The Impact of Sanctions on decentralised Privacy Tools: A Case Study of Tornado Cash

arXiv: https://arxiv.org/abs/2510.09443 · HTML: https://mlsanity.com/paper/2510.09443/

## Key facts

- Cited by 1 papers in the map (data through 14 Oct 2026).
- First posted on arXiv 10 Oct 2025.

## Built on by (most cited first, 1 of 1)

- [Is Decentralized AI Governable? From Regulative Policy to Constitutive Protocol](https://mlsanity.com/paper/2605.24538/) (2026)

## Abstract (arXiv)

This paper investigates the impact of sanctions on Tornado Cash, a smart contract protocol designed to enhance transaction privacy. Following the U.S. Department of the Treasury's sanctions against Tornado Cash in August 2022, platform activity declined sharply. We document a significant and sustained reduction in transaction volume, user diversity, and overall protocol utilization after the sanctions were imposed. Our analysis draws on transaction data from three major blockchains: Ethereum, BNB Smart Chain, and Polygon. We further examine developments following the partial lifting and eventual removal of sanctions by the U.S. Office of Foreign Assets Control (OFAC) in March 2025. Although activity partially recovered, the rebound remained limited. The Tornado Cash case illustrates how regulatory interventions can affect decentralized protocols, while also highlighting the challenges of fully enforcing such measures in decentralized environments.