US Court Ends Tornado Cash Sanctions Case
By: Eva Baxter
The U.S. Court of Appeals for the Eleventh Circuit has officially vacated the sanctions imposed by the Treasury Department against the Ethereum-based privacy tool Tornado Cash. This move effectively ends the legal proceedings related to the sanctions imposed by the Office of Foreign Assets Control (OFAC) in 2022, which had labeled Tornado Cash as a sanctioned entity. As part of a joint motion with both Coin Center and the Treasury, the court’s decision supports dismissal of the district court's prior ruling, which had upheld the sanctions and categorized Tornado Cash as an association whose smart contracts represented blocked property under regulatory provisions.
Coin Center, a crypto advocacy group, had initially challenged the Treasury's actions through a lawsuit, arguing that the sanctions exceeded statutory authority. This case was one of several filed against the Treasury's actions, including one by Tornado Cash users backed by crypto exchange Coinbase. Ultimately, the Treasury's decision in March to delist the Tornado Cash addresses, reasoning that new "targeted tools" could better mitigate illicit crypto flows, rendered the legal challenges largely moot. Consequently, both parties agreed to terminate the appeal, resulting in the conclusion of a case that once threatened to set significant precedents for blockchain privacy tools.
Despite this legal resolution, the Tornado Cash protocol itself remains operational on the Ethereum blockchain. Its native governance token, TORN, continues to be traded on decentralized exchanges. However, the recent developments do not affect the existing criminal cases against Tornado Cash developers Roman Storm and Roman Semenov, who face accusations of money laundering in New York. The resolution of this case does, though, leave lingering broader questions about the liability of developers for autonomous code that could potentially be tackled in future court adjudications.
The closure of this case returns Tornado Cash to the regulatory ambiguity it faced prior to the 2022 sanctions. Meanwhile, OFAC has signaled a potential shift to crafting more nuanced designations targeting entities that facilitate illicit use of cryptocurrency rather than blanket bans. While this case may be closed, the ongoing dialogue around privacy, regulation, and the use of decentralized technology is far from over.
