Catenaa, Wednesday, November 27, 2024-A federal appeals court on Tuesday overturned US Treasury sanctions against Tornado Cash, ruling that the crypto privacy tool cannot be classified as foreign property under sanction laws.
The decision, made by the 5th U.S. Circuit Court of Appeals, emphasized that Tornado Cash’s immutable smart contracts are software, not entities subject to Treasury Department regulations.
The court sided with six Tornado Cash users, stating the Treasury had overstepped its authority.
However, it clarified that the ruling does not protect individuals or groups misusing the technology for illegal activities, such as laundering.
The sanctions, enacted in 2022, were linked to Tornado Cash’s role in facilitating the laundering of over $7 billion in cryptocurrency, including $455 million by a North Korean hacking group.
The judgment prompted a 435% surge in Tornado Cash’s governance token, TORN, highlighting renewed investor confidence. Legal experts and industry leaders, including Coinbase’s Paul Grewal, lauded the ruling as a significant victory for crypto privacy and innovation.
Despite the legal challenges and sanctions, Tornado Cash saw a resurgence in 2024, processing $1.8 billion in deposits.
Judge Don Willett noted the need for legislative updates to address modern technologies like crypto-mixing tools. Until then, the court ruled the existing sanctions framework does not apply to Tornado Cash’s technology.
