What It Means for DeFi Privacy

A Texas District Court has ordered Tornado Cash’s sanctions to be lifted, effectively nullifying the punishments imposed by the Treasury’s Office of Foreign Assets Control (OFAC) against the popular mixing service.

In the immediate aftermath of this news, TORN, the powering token for the Tornado Cash ecosystem, soared up to 140%.

Court Reverses Sanctions Against Tornado Cash

The court ruled against the US Treasury regarding sanctions on Tornado Cash, a popular crypto-mixing service that enables users to anonymize their cryptocurrency transactions through smart contracts.

The ruling essentially finds that OFAC’s authority to sanction “property” cannot extend to autonomous, immutable code that no one controls. Specifically, the court determined that immutable smart contracts cannot be “property” because they cannot be owned or controlled by anyone.

It is based on the nature of Tornado Cash’s smart contracts, autonomous lines of code designed to function without human intervention. These contracts, deployed on the Ethereum blockchain, are unalterable and accessible to anyone. The court found that such contracts do not meet the legal definition of “property” because they cannot be owned, controlled, or restricted.

This determination aligns with a late November decision by the US appellate court, which ruled that Tornado Cash’s smart contracts are not property. As BeInCrypto reported, the court also established that OFAC overstepped its authority.

It emphasized that the immutable smart contracts underpinning Tornado Cash cannot be considered property under the International Emergency Economic Powers Act (IEEPA).

OFAC sanctioned Tornado Cash in 2022, alleging that the mixing service was a key tool for illicit actors, including North Korea’s Lazarus Group, to launder stolen funds. The decision had raised questions about privacy, regulation, and the future of decentralized finance.

Despite the latest developments, the court’s decision does not shield Tornado Cash from other legal challenges, particularly those concerning its founders. Tornado Cash developer Alexey Pertsev recently took to X (Twitter) to thank crypto executives for their support in his ongoing case. Among them were Ethereum co-founder Vitalik Buterin, who donated 30 ETH to Pertsev’s legal defense fund, and Gnosis executive Stefan George.

“I would like to thank everyone, especially Vitalik Buterin and Stefan George, for your incredible generosity to my defense. Your support inspires me to move forward, and I’m forever grateful. While the legal battle is far from over, I’m hopeful that 2025 brings positive developments,” Pertsev wrote.

Meanwhile, this development has turned heads following the recent presidential pardon of Silk Road’s Ross Ulbricht and calls for clemency for “Bitcoin Jesus,” Roger Ver. Crypto enthusiasts are now calling for amnesty for Roman Storm, one of Tornado Cash’s executives.

“Now pardon Roman Storm and all the other unfairly persecuted software engineers who are helping shape this country into what we need it to be,” a crypto executive said.

Tornado Cash’s token, TORN, soared by 140% on this news. However, as of writing, it was trading for $18.50, up by around 122% after some retracement.