The recent decision by the Eleventh Circuit Court of Appeals to vacate the Northern District of Florida’s 2023 order upholding the Treasury’s sanctions against Tornado Cash marks a significant development in the legal battle surrounding the Ethereum-based privacy mixer. The one-page mandate effectively ends the Coin Center v. Yellen appeal, the last remaining case challenging OFAC’s designation of Tornado Cash in August 2022.
Following the appellate court’s instruction to dismiss the case, the Northern District of Florida is now tasked with implementing the mandate and entering a short dismissal. It appears that no party has indicated an intention to seek Supreme Court review of the vacatur order, as initiating a new appeal from a fresh judgment would be unlikely given the outcome of the delisting.
The district court’s ruling in October 2023 that classified Tornado Cash as an “association” whose smart contracts constituted blocked property under the International Emergency Economic Powers Act had set the stage for the legal battle. However, a subsequent decision by the Fifth Circuit in Van Loon v. Treasury, which reversed a Texas court’s ruling on immutable smart-contract code, created a circuit split and ultimately influenced the outcome of the Tornado Cash case.
In response to the changing legal landscape, the Treasury opted to delist all Tornado Cash addresses on March 21, citing the implementation of newer targeted tools to combat illicit crypto flows more effectively. This action effectively nullified the factual basis for the Coin Center plaintiffs’ claims, leading to a joint motion for the Eleventh Circuit to vacate the district ruling and dismiss the case for mootness.
While the legal battle may have come to a close with the dismissal of the appeal, the practical implications for Tornado Cash remain somewhat limited. The protocol continues to operate on-chain without centralized control, and its governance token, TORN, remains actively traded on decentralized exchanges. The delisting and dismissal of the appeal do not impact the ongoing criminal proceedings against Tornado Cash co-founders Roman Storm and Roman Semenov, who are facing money laundering charges in the Southern District of New York.
Moving forward, unresolved questions regarding developer liability for downstream use of autonomous code are likely to be addressed in future enforcement actions rather than through civil suits like the one involving Tornado Cash. As the regulatory landscape continues to evolve, Tornado Cash finds itself back in a regulatory grey zone, while OFAC signals a potential shift towards more targeted designations for privacy tools with ties to sanctioned actors.