US Court Reverses Tornado Cash Sanctions, TORN Jumps 140%

Tornado Cash, a well-known crypto mixer, scored a major legal win when a U.S. District Court overturned sanctions placed on it. The decision, issued by the Western District of Texas, has sparked excitement in the crypto world. Following the news, Tornado Cash’s associated token, TORN, saw a dramatic 140% price surge, jumping from $9.50 to over $23.

Court Overturns Sanctions, Sending Case Back for Review

In a surprising twist, the court reversed an earlier decision supporting sanctions imposed on Tornado Cash. The official statement indicated that the District Court’s decision has been overturned, and the case has been sent back for further proceedings.

The case dates back to August 2022, when the U.S. Treasury’s Office of Foreign Assets Control (OFAC) sanctioned Tornado Cash. 

The agency claimed the crypto mixer had been used by North Korea to launder stolen digital assets. This resulted in the arrest of Alexey Pertsev, a developer of Tornado Cash. He was sentenced to over five years in prison on money laundering charges. The sanction prompted a lawsuit filed by Tornado Cash user Joseph Van Loon and five others.

The plaintiffs claimed that the Treasury and OFAC had overreached their authorities. Their case focused on the interpretation of the International Emergency Economic Powers Act (IEEPA), which allows the President to block “property” involving foreign entities.

The central issue was whether Tornado Cash’s software could be classified as “property.” The plaintiffs contended that the mixer’s smart contracts, which operate autonomously on the Ethereum blockchain, do not meet this definition. They argued that since no one has control over these contracts, they cannot be considered property.

Court Agrees: Tornado Cash Isn’t “Property”

In November 2024, an Appeals court ruled in favor of the plaintiffs. The court highlighted the special nature of immutable smart contracts, which are self-executing and cannot be changed or stopped by their creators.

As such, the court concluded that Tornado Cash’s smart contracts do not constitute “property” or “services” under the law as defined by IEEPA. Additionally, the Treasury’s attempt to label these contracts as “contracts of any nature” was also rejected. The court explained that immutable contracts do not involve agreements between parties and function entirely without human input.

Crypto Market Reacts Positively

The court’s ruling sent ripples through the crypto world. TORN’s value shot up by 140%, signaling renewed optimism about Tornado Cash’s future. This price increase highlights the importance of the decision for decentralized finance (DeFi).

The court ruling proves that legal clarity about tools like smart contracts remains crucial. The reversal of sanctions against Tornado Cash marks a pivotal moment for the crypto industry. It not only challenges U.S. sanctions laws but also highlights the legal issues around decentralized tech. As the case returns to the District Court, its outcome could impact future blockchain regulations.