Tornado Cash Sanctions Overturned by U.S. Appeals Court; TORN Soars Over 500%

The
decision
answers
the
controversial
debate
over
whether
the
crypto-mixing
service,
which
anonymizes
transactions,
can
be
banned
for
its
use
by
criminals.

Updated
Nov
27,
2024,
2:20 a.m.

Published
Nov
27,
2024,
12:26 a.m.

U.S.

sanctions
against
Tornado
Cash,
a
service
that
anonymizes
crypto
transactions,
must
be
abandoned,
a
federal
appeals
court
ruled
Tuesday.

The
decision
answers
a
controversial
privacy
debate
on
whether
the
government
—
via
a
sanctions
list
maintained
by
the
U.S.
Treasury
Department
—
has
a
right
to
target
the
technology
because
it’s
associated
with
criminals.
The
ruling
reversed
a
district
court’s
August
ruling
that
had
sided
with
the
government’s
pursuit
of
what
it
had
characterized
as
a
“notorious”
crypto-mixing
service.

“Tornado
Cash’s
immutable
smart
contracts
(the
lines
of
privacy-enabling
software
code)
are
not
the
‘property’
of
a
foreign
national
or
entity,”
according
to
a
U.S.
Court
of
Appeals
for
the
5th
Circuit

ruling,
so
they
can’t
be
blocked
under
the
International
Emergency
Economic
Powers
Act,
and
the
Treasury’s
Office
of
Foreign
Assets
Control
“overstepped
its
congressionally
defined
authority”
when
it
did
so.

Read
More:

Coinbase-Backed
Group
Loses
Lawsuit
Arguing
Tornado
Cash
Sanctions
Overstepped
U.S.
Treasury’s
Authority

OFAC
had
sanctioned
Tornado
Cash
last
year,
contending
that
it
was
a
vital
tool
used
by
bad
actors
including
North
Korea’s
Lazarus
Group
to
launder
crypto
tokens
pilfered
from
platforms
and
games
such
as
Axie
Infinity.

Coinbase
Inc.
(COIN)
and
others
had
sued
the
government,
claiming
it
had
overreached.
Paul
Grewal,
chief
legal
officer
of
crypto
exchange
Coinbase,

cheered
the
ruling
in
a
Tuesday
post
on
X,
calling
it
a
“historic
win
for
crypto.”

“These
smart
contracts
must
now
be
removed
from
the
sanctions
list
and
U.S.
persons
will
once
again
be
allowed
to
use
this
privacy-protecting
protocol,”
Grewal
wrote.
“Put
another
way,
the
government’s
overreach
will
not
stand.”

The
circuit
court
recognized
the
difficulty
of
this
situation.

“We
readily
recognize
the
real-world
downsides
of
certain
uncontrollable
technology
falling
outside
of
OFAC’s
sanctioning
authority,”
the
judges
said,
referencing
the
ineffectiveness
of
a
law
that
was
established
well
before
the
world
moved
online.
“But
we
must
uphold
the
statutory
bargain
struck
(or
mis-struck)
by
Congress,
not
tinker
with
it.”

In
the
hours
following
the
ruling,
Tornado
Cash’s
TORN
token
rallied
over
500%,

according
to
CoinGecko
data,
passing
the
$20
mark.
TORN
dropped
from
this
price
range
to
below
$8
in
mid-2022
as
its

founders
faced

legal
challenges
and
the
U.S.
Department
of
the
Treasury

sanctioned
the
protocol,
which
blocked
its
use
on
most
major
centralized
crypto
exchanges.

UPDATE
(Nov.
27,
02:05
AM
UTC): Updates
story
with
latest
price
action.