Tornado Cash, which offers a cryptocurrency mixing service, was added to the OFAC sanctions list by the US Treasury Department in 2022.
There has been a new development in the Tornado Cash case, which has been ongoing since this date.
Accordingly, the US appeals court said that OFAC, which is part of the Treasury Department, “overstepped the limits” regarding Tornado Cash.
A three-judge panel of the U.S. Fifth Circuit Court of Appeals overturned the lower court's decision, finding that OFAC exceeded its authority in imposing sanctions on Tornado Cash.
“Tornado Cash's immutable smart contracts (the lines of software code that enable privacy) are not 'property' of a foreign national or entity,” the court ruled, “and therefore cannot be controlled or intercepted under the International Emergency Economic Powers Act. Therefore, they are not property, and OFAC has exceeded its Congressionally-defined authority.”
Consensys attorney Bill Hughes said the decision does not mean Tornado Cash is free from legal action.
“These smart contracts should now be removed from the sanctions list and US citizens should once again be allowed to use this privacy-preserving protocol,” Coinbase chief legal officer Paul Grewal wrote in the X post.
Following the court decision, Tornado Cash (TORN) rose by up to 1000% to over $40. However, TORN, which fell as quickly as its rise, continues to trade at $14 with a 270% increase in the last 24 hours.
What Happened?
The U.S. Treasury Department imposed sanctions on Tornado Cash in August 2022, alleging that it had been used to launder more than $7 billion worth of cryptocurrencies since its inception in 2019.
Later, six Tornado Cash users, led by Joseph Van Loon, with the support of Coinbase, filed a lawsuit against the US Treasury, arguing that Tornado Cash’s addition to the OFAC sanctions list was “unlawful.”
*This is not investment advice.