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Tornado Cash Wins Big: US Court Blocks Treasury Sanctions Permanently
In a significant victory for the cryptocurrency community, a U.S. federal court has permanently barred the Office of Foreign Assets Control (OFAC) from reimposing sanctions on Tornado Cash, a crypto mixing service. The ruling, issued by Judge Robert Pitman of the Austin-based district court, sets a crucial precedent in determining whether open-source crypto protocols can be held liable for how their tools are used.
The controversy surrounding Tornado Cash began in August 2022, when the U.S. Treasury accused it of enabling North Korean hacker group Lazarus to launder stolen cryptocurrency assets. The platform subsequently challenged the sanctions in court, arguing that developers should not be penalized for how their code is used by others. Following a series of legal setbacks and victories, OFAC ultimately removed Tornado Cash from its sanctions list in March. However, the company continued to push for permanent relief, citing broader regulatory overreach concerns.
Initially, a lower court sided with the U.S. Treasury, strengthening the government’s stance. Nevertheless, this decision was later overturned by the Fifth Circuit Court, paving the way for Judge Pitman’s conclusive ruling. The final verdict reinforces that OFAC cannot impose sanctions on the protocol itself, setting an important legal precedent in the crypto space.
Despite this major win for Tornado Cash, legal troubles persist for its co-founder, Roman Storm. In August 2023, he was charged with laundering over $1 billion through the platform. His next hearing is scheduled for July 2025.
In related news, the DeFi Education Fund urged the White House to drop the charges against Storm on the same day as the favorable court ruling. The organization warned that holding developers accountable for code misuse could stifle innovation in the U.S. crypto space.
By winning this critical case, Tornado Cash has secured a significant victory, ensuring its protocol is now permanently exempt from sanctions. This landmark decision should serve as an important reminder to regulators and policymakers of the need to prioritize clarity and transparency in their regulatory approach.
Source: https://coinpedia.org/news/tornado-cash-wins-big-us-court-blocks-treasury-sanctions-permanently/
