According to Cointelegraph, the U.S. Court of Appeals for the Fifth Circuit ruled that the U.S. Treasury Department's Office of Foreign Assets Control (OFAC) exceeded its statutory authority when sanctioning Tornado Cash's smart contracts. This ruling may lead to policy changes in 2025, affecting how courts deal with cryptocurrency mixer addresses.
Consensys senior legal counsel Bill Hughes said that while OFAC still has the authority to sanction entities associated with Tornado Cash, the case will likely go back to a lower court for a refiled motion for summary judgment, which could take months.
It is expected that after the Trump administration takes office in 2025, the Treasury Department may adjust its sanctions policy to comply with the court ruling or continue to appeal. Trump has said that he may adopt the court's analysis of immutable smart contracts.
Under the Biden administration, OFAC added 44 Tornado Cash smart contract addresses to the Specially Designated Nationals List in August 2022, accusing them of being used to launder more than $7 billion.
Additionally, Coin Center filed a lawsuit against the U.S. Treasury in 2022, arguing that Tornado Cash or related smart contracts were not sanctionable “property.”
In 2023, the U.S. Department of Justice filed charges against Tornado Cash co-founders Roman Storm and Roman Semenov. Storm was arrested and is scheduled to stand trial in April 2025, while Semenov remains on the FBI's wanted list. A Dutch court sentenced the third co-founder, Alexey Pertsev, to five years in prison, and his lawyers are preparing an appeal.