Tornado Cash Ban Lifted by U.S. Appeals Court; TORN Surges Over 500%

Tornado Cash has secured a significant legal victory as the U.S. federal appeals court ruled against sanctions imposed on the crypto-mixing service. This decision addresses the contentious debate on whether such technology, which facilitates anonymous transactions, can be targeted due to its misuse by criminals.

The court’s ruling overturns an earlier decision by a district court that had upheld the government’s action to sanction Tornado Cash. According to the U.S. Court of Appeals for the 5th Circuit, Tornado Cash’s immutable smart contracts cannot be classified as “property” under the International Emergency Economic Powers Act, thus limiting the Treasury’s Office of Foreign Assets Control (OFAC) from blocking them. The court concluded that OFAC exceeded its legal authority in sanctioning the protocol.

Tornado Cash’s Legal Win Sparks Privacy Debate

OFAC originally sanctioned Tornado Cash in 2022, arguing that it was a critical tool for money laundering, notably used by North Korea’s Lazarus Group. This included laundering funds from high-profile hacks like those involving Axie Infinity. However, Coinbase and other crypto advocates challenged the sanctions, claiming government overreach.

Paul Grewal, Coinbase’s chief legal officer, hailed the decision as a “historic win for crypto.” He emphasized that Tornado Cash’s smart contracts must now be removed from the sanctions list, allowing U.S. citizens to resume using the protocol. Grewal framed the decision as a victory against government overreach.

While the court acknowledged concerns about the potential misuse of uncontrollable technologies, it emphasized the need to adhere to legislative boundaries. The judges noted that updating outdated laws is a matter for Congress, not the courts.

TORN Token Skyrockets Post-Ruling

Following the court’s decision, Tornado Cash’s TORN token surged by more than 500%, surpassing the $20 mark, according to CoinGecko. This is a significant rebound from mid-2022 when TORN fell below $8 amid legal challenges and sanctions that restricted its use on major crypto exchanges.

This ruling not only reinforces privacy rights within the crypto space but also sets a precedent for how similar technologies may be treated under U.S. law moving forward.

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