Tornado Cash co-founder Roman Semenov has been named to the US Office of Foreign Assets Control's (OFAC) Specially Designated Nationals (SDN) List. Since its launch in 2019, Tornado Cash has been accused of aiding billions of dollars in money laundering.
Semenov's inclusion on the SDN list emphasizes the regulatory issues posed by decentralized protocols. Previously, the US Treasury Department sanctioned Tornado Cash for its ties to the North Korean-affiliated Lazarus Group, which is renowned for stealing over $455M in crypto.
Semenov's listing makes it illegal for US people and corporations to transact with him or his related Ethereum addresses. On the other hand, Tornado Cash's decentralized nature makes it harder for regulators to shut down the system. Critics claim that penalizing persons without due process raises worries about invasion of privacy and a lack of defined legal frameworks.
Finally, Semenov's actions highlight the difficulty of controlling decentralized systems while guaranteeing privacy and compliance.