Tornado Cash Sanctions Reversed in Landmark Ruling

The U.S. Court of Appeals for the Fifth Circuit has reversed the sanctions previously imposed on Tornado Cash, a decentralized crypto mixer, by the Treasury Department’s Office of Foreign Asset Control (OFAC).

The Fifth Circuit’s ruling stated: “It is ordered and adjudged that the judgment of the District Court is reversed, and the cause is remanded to the United States Court of Appeals District Court for further proceedings in accordance with the opinion of this Court.”

Tornado Cash enables users to enhance their financial privacy by obfuscating the source of digital assets. The platform has been controversial due to its use by malicious actors, including hackers linked to North Korea, to launder stolen funds. These concerns led OFAC to sanction the platform, labeling it a threat to national security.

However, in November 2023, the court found that OFAC’s definition of “property” under the sanctions was flawed. Specifically, the court noted that immutable smart contracts—the backbone of Tornado Cash—cannot be considered property because they are not ownable, contractual, or serviceable in a traditional sense. As such, the sanctions were deemed unlawful.

In November 2024, A federal appeals court ruled that US sanctions imposed on the platform must be lifted.

The decision caused Tornado Cash’s native token, TORN, to experience a significant rally, climbing from $8.08 to a peak of $25.28 – a 212% gain. While the token has since retraced to $18.6, the ruling has injected optimism into the market, with many viewing it as a win for decentralization and privacy-focused technologies.

Vitalik Buterin’s Call for Justice

The court’s decision has also amplified calls for justice in the cases of Tornado Cash developers Roman Storm, Alexey Pertsev, and Ethereum developer Virgil Griffith.

Storm, co-founder of Tornado Cash, was charged with money laundering and sanctions violations in 2023. He has argued that the charges infringe on his First Amendment rights and has criticized delays in his trial. Meanwhile, Pertsev and Griffith have also faced significant legal challenges. Griffith was sentenced to 56 months in prison in 2021 after pleading guilty to advising North Korea on how to use crypto to bypass sanctions.

Vitalik Buterin, Ethereum’s co-founder, has been a vocal advocate for their release. Referencing former President Donald Trump’s recent pardon of Silk Road creator Ross Ulbricht, who was serving a double life sentence for creating the infamous Silk Road darknet marketplace, Buterin emphasized the importance of fairness in the treatment of crypto pioneers.

“No man left behind,” Buterin wrote on X, urging action to secure the release of Storm and Pertsev. This rallying cry comes as the crypto community reflects on the broader implications of legal actions against developers and platforms.