U.S. Appeals Court Reverses Tornado Cash Sanctions; TORN Token Jumps Over 500%
In a significant turning point for the cryptocurrency sector, a U.S. federal appeals court has overturned the sanctions that the Treasury Department had placed on Tornado Cash, a service designed for mixing cryptocurrencies.
The court found that the government overstepped its authority by labeling the technology behind Tornado Cash as a sanctioned entity.
In response to this ruling, the value of TORN, Tornado Cash’s native token, surged by more than 500%.
Court’s Mandate on Tornado Cash
On Tuesday, the appeals court mandated the removal of sanctions on Tornado Cash, which is well-known for providing anonymity in cryptocurrency transactions.
This decision shines a light on the heated debate regarding privacy rights and the limits of government intervention in the technology sphere, especially in relation to criminal activity.
The court’s ruling reversed a prior district court verdict from August, which had sided with the government’s position that the service was primarily associated with illegal acts.
Legal Implications and Market Response
The 5th Circuit Court of Appeals emphasized that Tornado Cash’s immutable smart contracts—which are essentially the programming code underpinning its privacy features—are not classified as assets owned by any foreign individual or organization.
Consequently, these smart contracts fall outside the restrictions of the International Emergency Economic Powers Act.
The court pointed out that the Treasury’s Office of Foreign Assets Control (OFAC) had exceeded its legal authority in this instance.
Last year, the OFAC imposed sanctions on Tornado Cash, claiming that it was frequently exploited by malicious entities, including North Korea’s Lazarus Group, for laundering illicitly obtained cryptocurrency.
In the wake of these sanctions, firms like Coinbase stepped forward to challenge the government’s actions, asserting that they represented an overreach of power.
Paul Grewal, Coinbase’s chief legal officer, hailed the court’s ruling as a monumental victory for the cryptocurrency community.
While acknowledging the genuine challenges posed by technologies that can operate beyond OFAC’s reach, the court reaffirmed the need to comply with the legal standards established by Congress.
As news of the ruling spread, Tornado Cash’s TORN token experienced an impressive surge, climbing past $20 and reflecting the significant impact this judicial decision had on market dynamics.
Source: Coindesk
