# Why Ketju rejected Tornado Cash

- URL: https://riadefi.com/rejections/tornado-cash/
- Exposure: other
- Memo version: v1
- Reviewed: 2026-08-19
- Next review: 2026-11-19

## The memo

REJECTED. Tornado Cash is privacy infrastructure, not an investment or yield venue, and directing ordinary advisory assets through it would create a disproportionate AML, source-of-funds, custody-note, and counterparty-screening burden with no compensating portfolio return. Treasury removed Tornado Cash sanctions in March 2025, so this is not a stale sanctions rejection. The live fact is narrower and stronger: DOJ obtained a 2025 conviction for knowingly operating an unlicensed money-transmission business that moved criminal proceeds, while immutable pools provide no counterparty screening.

## What would reopen the file

- A client-specific privacy mandate is approved by counsel and compliance with documented lawful purpose and transaction-monitoring controls
- The custodian, banking, and tax-reporting counterparties confirm in writing that the proposed flow and compliance report are acceptable
- A proposed-size test preserves the withdrawal note and produces a complete source-of-funds report without an unapproved relayer

---

Published by Ketju Research (https://ketjuresearch.com). Educational analysis only; not legal, tax, compliance, or investment advice.
Machine-readable index: https://riadefi.com/llms.txt · Content API: https://riadefi.com/content.json