A U.S. appeals court has decided that the U.S. Treasury Department overstepped its authority when it sanctioned the cryptocurrency mixer Tornado Cash in 2022. Tornado Cash was accused of helping launder over $7 billion for cybercriminals, including those linked to North Korea. The ruling favored six users of Tornado Cash, supported by the exchange Coinbase, who argued that the software’s design, which anonymizes transactions, shouldn’t be classified as property. While there are concerns about the risks of such technology, supporters believe that changes to the law should come from Congress, not the courts. Coinbase praised the ruling as a significant step for cryptocurrency and privacy rights, emphasizing that broad sanctions against technology could hinder innovation.
The US appeals court has decided that the US Treasury Department went too far when it imposed sanctions on the cryptocurrency mixer Tornado Cash in 2022. The Treasury had accused Tornado Cash of helping to launder over $7 billion for hackers linked to North Korea and other criminals. This ruling came from the 5th US Circuit Court of Appeals in New Orleans, which supported six users of Tornado Cash who, with help from the cryptocurrency exchange Coinbase, challenged the sanctions in court.
Tornado Cash and similar tools are designed to make digital transactions anonymous by hiding the source and ownership of the money. The Treasury’s Office of Foreign Assets Control (OFAC) sanctioned Tornado Cash under a law that allows it to take action against international threats, claiming that the mixer helped launder funds from cybercrimes, including $455 million stolen by a North Korea-affiliated group.
While some argue that federal law gives OFAC the right to regulate property, the court raised questions about whether Tornado Cash’s smart contracts, which operate independently and cannot be controlled, should be classified as property at all. These smart contracts provide users with enhanced privacy by mixing their funds together.
Experts acknowledged the risks of unregulated technology but emphasized that updating the law should be Congress’s job, not the courts. Tornado Cash’s design makes it difficult to legally categorize it as property.
Although the Treasury Department has not commented on the ruling, Coinbase officials celebrated the decision, calling it a significant win for the cryptocurrency community and a defense of privacy. They warned that sanctioning technologies could harm innovation. The ruling comes at a time when Tornado Cash is under increased legal scrutiny, with one of its developers recently sentenced for money laundering in the Netherlands and several founders facing charges in the US.
Tags: US Treasury, Tornado Cash, cryptocurrency, court ruling, sanctions, Coinbase, privacy, digital transactions, cybercrime, legal challenges
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What happened with Tornado Cash?
A court decided that the US government could not enforce sanctions against Tornado Cash, a cryptocurrency mixer. This means the court found the sanctions were not justified. -
Why was Tornado Cash sanctioned?
The US government sanctioned Tornado Cash because they believed it helped people hide illegal activities by mixing cryptocurrencies to make them untraceable. -
What does this court ruling mean for cryptocurrency users?
This ruling may allow users to access Tornado Cash again without fear of penalties from the US government, as the sanctions have been overturned. -
Could the government appeal this decision?
Yes, the US government has the option to appeal the court’s decision if they choose to challenge it further. - Is Tornado Cash a legal service now?
While the court’s ruling may make it legal to use Tornado Cash, the situation could change if the government decides to take further action or if new regulations are introduced.
