The Fifth Circuit Court of Appeals has made a significant ruling in the case involving Tornado Cash and the US Treasury’s Office of Foreign Assets Control (OFAC). The court has ordered OFAC to remove addresses linked to Tornado Cash from its list of Specially Designated National and Blocked Persons (SDN).
Tornado Cash, a crypto mixing service, was banned by OFAC in August 2022 due to its association with hackers, including North Korea’s Lazarus Group, who used the service to launder stolen cryptocurrency. Despite the controversy surrounding Tornado Cash, the court has now determined that the service’s smart contracts cannot be blocked under the International Emergency Economic Powers Act (IEEPA). The court also concluded that OFAC had overstepped its authority in sanctioning Tornado Cash.
Following the initial sanctions, one of Tornado Cash’s developers, Alexey Pertsev, was arrested in the Netherlands, leading to protests in support of free speech. Subsequently, the project’s other developers, Roman Storm and Roman Semenov, faced money laundering charges in the US.
Despite the legal challenges and decreased usage of Tornado Cash due to restrictions imposed by various crypto applications, the service’s governance token, TORN, saw a significant increase in value following the court’s decision. The token’s price surged over 200%, reaching approximately $25 at the time of writing.
While Tornado Cash has been used for illicit purposes by hackers and scammers, many argue that it also serves as a valuable privacy tool for legitimate users. In a blockchain ecosystem that prioritizes transparency, tools like Tornado Cash allow individuals to protect their financial privacy and prevent the tracking of their transactions.
As the debate over the use of crypto mixers like Tornado Cash continues, the court’s decision to remove Tornado Cash addresses from the SDN list marks a significant development in the ongoing legal battle over privacy rights in the cryptocurrency space.