Tornado Cash, a popular crypto mixer and the company behind the altcoin TORN, has been in trouble with the law for some time now. In the latest developments, judges sided with the crypto mixing service’s users, agreeing that the code cannot be sanctioned, but it can be applied to humans.
A critical ruling for the altcoin
A federal appeals court ruled against the U.S. Treasury Department’s sanctions against Tornado Cash in the New Orleans Court of Appeals on Tuesday, November 26. The three-judge panel found that the Treasury exceeded its legal authority by imposing sanctions on the software itself, rather than specific individuals or entities. The court found that the code for the Tornado Cash software could not be classified as sanctionable “property.” Coinbase supported the legal challenge by opposing the general blocking of open-source technology.
District Judge Don Willett said the U.S. government’s concerns about foreign actors laundering funds through the crypto mixer were “undeniably legitimate.” But according to Bloomberg, federal law only gives the Treasury Department the authority to take action against property. Willett said:
Perhaps Congress will update the Carter Administration to address modern technologies like crypto-mixing software. Until then, we believe Tornado Cash’s immutable smart contracts are not ‘property’ of a foreign national or entity, meaning they cannot be intercepted.
$7 billion allegedly laundered
The Treasury Department’s Office of Foreign Assets Control (OFAC) first sanctioned Tornado Cash in 2022, alleging that it was used to launder over $7 billion in crypto, including $455 million by hacking groups affiliated with North Korea. Uniswap founder Hayden Adams said, “The rate at which crypto is being killed in federal courts is incredible.” Coinbase chief legal officer Paul Grewal, meanwhile, added that this was “a historic win for anyone who cares about defending crypto and freedom.” He also said:
Privacy wins. These smart contracts should now be removed from the sanctions list, and US individuals will once again be allowed to use this privacy-preserving protocol. In other words, government overreach is unacceptable. No one wants criminals using crypto protocols, but completely blocking open-source technology because a small portion of users are bad actors is not something Congress has the authority to do.
TORN price rises
The Tornado Cash native token TORN has surged more than 850 percent on the decision, jumping from $3.60 to $35. While TORN has fallen back to around $18 at the time of writing, it is up more than 400 percent in the past 24 hours. However, the crypto mixer token remains down 96 percent from its all-time high of $436 in February 2021, according to Coingecko.
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