TL;DR
The U.S. Court of Appeals ruled that Tornado Cash’s immutable smart contracts are not “property” and cannot be sanctioned by OFAC.
The decision is a significant win for privacy-focused technologies, highlighting the limitations of governmental authority over decentralized systems.
Following the ruling, Tornado Cash’s TORN token surged nearly 400%, reflecting strong market confidence and interest.
In a landmark decision, the U.S. Court of Appeals for the Fifth Circuit has ruled in favor of Tornado Cash, declaring that the Treasury Department’s Office of Foreign Assets Control (OFAC) overstepped its authority by sanctioning the crypto mixer’s immutable smart contracts.
The court found that these smart contracts, which are lines of privacy-enabling software code, do not qualify as “property” under the International Emergency Economic Powers Act (IEEPA) and therefore cannot be blocked.
Implications Tornado Cash’s Ruling
The ruling is a significant win for the cryptocurrency industry, particularly for privacy-focused technologies. The court’s decision underscores the limitations of governmental authority over decentralized technologies, reaffirming that immutable smart contracts cannot be owned or controlled and thus do not fall under the purview of IEEPA.
This decision marks a pivotal moment in the ongoing debate over the balance between privacy, decentralization, and regulatory oversight.
TORN Token’s Meteoric Rise
Following the court’s decision, Tornado Cash’s native token, TORN, experienced a dramatic surge in value. The token skyrocketed by nearly 400%, since the news broke, trading at around $17.50.
This surge reflects renewed investor confidence and highlights the market’s positive response to the legal victory. The trading volume of TORN also saw a significant increase, further indicating strong market interest.
Industry Reactions
The ruling has been hailed as a historic win for the crypto community. Legal experts and industry leaders have praised the decision, emphasizing its importance for the future of privacy technologies.
Bill Hughes, a lawyer at Consensys, noted that the ruling clarifies the limitations of OFAC’s authority, while Coinbase’s Chief Legal Officer, Paul Grewal, described it as a victory for privacy and liberty.
While the court’s decision is a major win for Tornado Cash, it does not absolve the platform from all regulatory scrutiny. Other aspects of Tornado Cash remain within OFAC’s reach, and the platform’s founders still face legal challenges. Nonetheless, this ruling sets a precedent for the treatment of decentralized technologies and is likely to influence future regulatory approaches.