Curriculum·J311 Privacy, Surveillance, and Compliance Exposure·about 35 min
Privacy tooling and its legal reality
By the end of this lesson you can
- →Separate the four categories of privacy tooling by what each actually conceals
- →Name the three distinct legal theories that attach, and what each requires to be proved
- →Compute how often the legal status of one tool changed, and what that implies for planning
- →State why the exposure of a user and the exposure of a builder are different questions
Junior · enrolled learners
This lesson opens with Tornado Cash and its legal status, 2022 to 2025.
- What happened
- On 8 August 2022 OFAC added Tornado Cash to the Specially Designated Nationals list, making it unlawful for US persons to transact with it. On 14 May 2024 a Dutch court in 's-Hertogenbosch convicted developer Alexey Pertsev of money laundering and sentenced him to 64 months; he has appealed, and in February 2025 he was released from pretrial detention under electronic monitoring to await the appeal. On 26 November 2024 the Fifth Circuit decided Van Loon v. Department of the Treasury, holding that the immutable smart contracts were not the 'property' of a foreign national or entity, so they could not be blocked under the International Emergency Economic Powers Act and OFAC had overstepped its authority. On 21 March 2025 OFAC delisted Tornado Cash. On 6 August 2025 a jury in the Southern District of New York convicted co-founder Roman Storm of conspiring to operate an unlicensed money transmitting business, which carries a maximum of five years, and deadlocked on the money laundering and sanctions conspiracy counts, which carry twenty years each. His motion for acquittal on the conviction was still undecided in August 2026, when the retrial on the two deadlocked counts was set for April 2027. Separately, the Samourai Wallet founders pleaded guilty on 30 July 2025 to conspiring to operate a money transmitting business that transmitted criminal proceeds, also a five-year maximum, and were sentenced in November 2025 to five and four years.
- The decision point
- The same code was lawful to touch, then unlawful, then lawful again, across thirty-six months, while its authors were prosecuted throughout, and the one charge that produced a US conviction, money transmission, did not depend on the sanctions status at all. The legal position of a privacy tool is not a property of the tool. It is a property of a jurisdiction at a date, and it moves faster than any plan built on it.
What you will be able to answer
- →What are the four categories of privacy tooling?
- →What are the three legal theories?
- →How fast did the status change?
- →User exposure or builder exposure?
Orientation and Year One are open: anyone can read them without an account. From Year Two onward the lessons are for enrolled learners, because progress through the later years only means anything if it is tracked against a record.
It is free. We do not sell the list and there is nothing to buy at the end of it.
Sources and review
- https://www.coindesk.com/policy/2025/08/06/roman-storm-guilty-of-unlicensed-money-transmitting-conspiracy-in-partial-verdict
- https://www.coindesk.com/policy/2024/05/14/tornado-cash-developer-alexey-pertsev-found-guilty-of-money-laundering
- https://www.ca5.uscourts.gov/opinions/pub/23/23-50669-CV0.pdf
- https://www.paulhastings.com/insights/crypto-policy-tracker/a-whirlwind-of-change-the-delisting-of-tornado-cash
- https://www.justice.gov/usao-sdny/pr/tornado-cash-founders-charged-money-laundering-and-sanctions-violations
- https://www.theblock.co/news/regulation/2026-08-26-tornado-cash-roman-storm-retrial-april-2027-412761
- https://www.theblock.co/post/339401/tornado-cash-developer-alexey-pertsev-gets-nod-for-conditional-release-from-prison-to-work-on-appeal
- https://www.justice.gov/usao-sdny/pr/founders-samourai-wallet-cryptocurrency-mixing-service-plead-guilty
- https://www.irs.gov/compliance/criminal-investigation/founders-of-samourai-wallet-cryptocurrency-mixing-service-sentenced-to-five-and-four-years-in-prison
- https://ofac.treasury.gov/media/913571/download?inline
- https://web.archive.org/web/20250308214706/https://ofac.treasury.gov/faqs/1078
- https://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=OJ:L_202401624
Confidence medium·Volatility high·Reviewed 2026-10-22·Owner unassigned
Contested
This lesson describes law and does not give legal advice, and per P6 the uncertainty is the substance rather than a caveat attached to it. Positions differ by jurisdiction, several of the questions here are unsettled, and the Storm jury deadlocked on the two most serious counts, which means those theories are neither accepted nor rejected. Anybody with a live question needs a lawyer in their own jurisdiction, not a lesson.
Status as of this review (October 2026), and expected to move: Storm's motion for acquittal on the money transmitting conviction was argued in April 2026 and was undecided when The Block reported on 26 August 2026 that the retrial on the money laundering and sanctions conspiracy counts had been set for 26 April 2027. Pertsev's appeal in the Netherlands was pending; we found no appeal judgment. Re-check both before relying on this lesson.
Counting the Pertsev conviction and the Storm verdict as changes to the tool's legal status is this lesson's framing. Neither changed whether a US person could lawfully use the contracts; they changed what the record says about building and operating such a tool. The nine-month cadence is an illustration of pace, not a measured rate.
The EU Anti-Money Laundering Regulation, Regulation (EU) 2024/1624, applies from 10 July 2027 (from 10 July 2029 for two categories of obliged entity). Its Article 79 prohibits credit institutions, financial institutions and crypto-asset service providers from keeping anonymous accounts or any account allowing the anonymization of the account holder or the anonymization or increased obfuscation of transactions, including through anonymity-enhancing coins. It binds regulated providers, not individuals. Implementation detail is still emerging; treat the direction as settled and the detail as provisional.
On sanctions and unsolicited transfers, OFAC said in its FAQ 1078 that where a dusting transaction had no sanctions nexus beyond Tornado Cash it would not prioritize enforcement against late blocking reports by the recipient. That FAQ was issued while Tornado Cash was designated; we cite an archived copy because the live page refuses automated requests.
This lesson deliberately does not describe how to use any of these tools, and per the course's editorial note it must not read as instruction in evasion. The material a learner needs here is the legal landscape and the categories, which is what supports the compliance decisions in J311-04 and the hygiene in J311-05.