Tornado Cash Sanctions Overturned by U.S. Appeals Court
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A U.S. appeals court has reversed sanctions against Tornado Cash, a cryptocurrency mixing service, marking a historic victory for privacy campaigners.
The U.S. government accused Tornado Cash of assisting money laundering for criminals, notably North Korea’s Lazarus Group, by anonymizing stolen cryptocurrency transactions. The court concluded that Tornado Cash’s immutable smart contracts are not deemed property under current law, limiting the government’s ability to control such technology.
As a result, this ruling follows Coinbase and others’ legal challenge to the U.S. Treasury’s activities. Tornado Cash’s TORN token responded with a surge of over 500%.
Privacy and Technology Legal Victory for Tornado Cash
The U.S. Court of Appeals for the 5th Circuit ruled that the Treasury Department overstepped its authority in sanctioning Tornado Cash. The court clarified that the service’s decentralized smart contracts are not “property” and cannot be blocked under the International Emergency Economic Powers Act. This decision overturned an earlier district court ruling that supported the sanctions.
To this end, Coinbase Chief Legal Officer Paul Grewal celebrated the decision, calling it a pivotal moment for crypto privacy rights.
Market Impact of the Ruling
Following the ruling, Tornado Cash’s TORN token experienced an unprecedented rally, gaining over 500% in just hours and surpassing $20. This rebound comes after TORN had dropped significantly in 2022 due to legal and regulatory pressures.
This ruling, however, removed the smart contracts from the sanctions list and also allowed U.S. users to engage with the protocol again, boosting investor confidence and market activity.
Therefore, the appeals court’s decision highlights the challenges of applying outdated laws to modern technologies like decentralized finance. While the ruling underscores the limits of government authority, it also emphasizes the complexity of balancing privacy rights and national security. Tornado Cash’s renewed market activity signals optimism in the crypto community for fairer regulations.
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