Due to the recent seizure of funds by Canadian authorities from CEX without KYC TradeOgre, many people consider DEXs to be untouchable: non-custodial, no KYC, supposedly beyond confiscation. In theory, it’s a fortress. In practice, regulators have already shown they can strike these systems.

The first warning shot came in 2022 with Blender .io, a mixer accused of laundering funds for the Lazarus Group. OFAC sanctioned it, signaling that the code itself could be treated as complicit.

Later that year, Tornado Cash was targeted. The U.S. Treasury accused it of enabling billions in laundering. The smart contract continued to run, but the developers were arrested and the frontends were taken down.

The playbook was clear: if the funds in the contract can’t be seized, regulators pressure the human layer—builders, interfaces, and visible liquidity.

In 2024, a U.S. Court of Appeals ruled that an immutable contract is not “property” subject to sanctions. This created the first major crack in the government’s strategy.

By March 2025, OFAC had to lift its sanctions on Tornado Cash. Not voluntarily, but because the courts forced its hand. A rare legal win for decentralization.

Still, the crackdown didn’t stop there. In 2024 and 2025, Samourai Wallet founders were arrested in the U.S., charged with money laundering conspiracy and operating an unlicensed money services business.

Samourai wasn’t a DEX, but its privacy tools (Whirlpool, Ricochet) made it a target. The case showed that even non-custodial wallets focused on anonymity aren’t immune from prosecution.

The line has shifted: it’s no longer only about custody of funds. If you build tools that give users strong privacy, you can end up in prosecutors’ crosshairs.

The takeaway: DEXs make direct confiscation harder, but they’re not untouchable. The battleground is moving toward developers, frontends, and access layers. The clash between immutable code and mutable law is just beginning.