Government Sanctions on Tornado Cash Reversed by U.S. Courts in Landmark Ruling

A new court ruling has reversed the sanctions placed on crypto mixer Tornado Cash (TORN) by the US government.

According to a recent filing by the New Orleans-based U.S. Court of Appeals for the Fifth Circuit, the previous decision to place sanctions on the digital assets tumbler has been lifted.

“It is ordered and Adjudged that the judgment of the District Court is reversed, and the cause is remanded to the United States Court of Appeals District Court for further proceedings in accordance with the opinion of this Court.”

Tornado Cash was first sanctioned by the Treasury Department’s Office of Foreign Asset Control (OFAC) after being deemed a threat to the nation’s security as hackers associated with the government of North Korea were believed to have used it to clean stolen funds.

Crypto mixers allow users to obfuscate the source of their digital assets by mixing them with other coins from different sources and giving each user back the dollar amount they put in.

In November, the court ruled that the OFAC’s sanctions failed to correctly define “property” in their sanctions. He went on to say that if “property” means “capable of being owned,” then Tornado Cash and its smart contracts wouldn’t quality, thus making the sanctions unlawful.

“Contrary to the Department’s arguments, the immutable smart contracts are not services. So even when we consider OFAC’s regulatory definitions, the immutable smart contracts are not property because they are not ownable, not contracts, and not services.”

News of the landmark ruling caused TORN to spark a massive rally, going from a price of $8.08 on January 21 to a peak of $25.28, a gain of 212%. The token has since retraced and is moving for $19.57 at time of writing.

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Generated Image: Midjourney