On Tuesday, the U.S. Federal Appeals Court ruled that the sanctions against the mixer Tornado Cash must be lifted, overturning a previous ruling by the district court. Does the U.S. government have the authority to impose sanctions 'due to the misuse of mixing technology for criminal activities'? The latest ruling provides a clear answer to this question.

According to the ruling of the U.S. Fifth Circuit Court of Appeals, Tornado Cash's 'immutable smart contracts'—the code used to protect transaction privacy—do not belong to any foreign individual or entity's 'property' and therefore cannot be included in sanctions under the International Emergency Economic Powers Act (IEEPA).

The court explicitly stated that in this case, the U.S. Department of the Treasury's Office of Foreign Assets Control (OFAC) 'exceeded the authority granted to it by Congress.'

This ruling directly overturned a district court's decision in August of this year, when the court had supported the government's sanctions actions against Tornado Cash.

In August 2022, OFAC announced sanctions against Tornado Cash, prohibiting U.S. citizens from using the service and alleging that the platform had laundered over $7 billion in cryptocurrency since 2019, including $455 million stolen by the North Korean hacker group Lazarus Group.

In August 2023, two developers of Tornado Cash, Roman Storm and Roman Semenov, were accused of money laundering and violating sanctions regulations; in May 2024, another developer, Alexey Pertsev, was convicted of laundering $1.2 billion in the Netherlands and sentenced to 64 months in prison.

After the sanctions order was overturned, Coinbase's Chief Legal Officer Paul Grewal described it as a 'historic victory for the cryptocurrency space,' emphasizing that this ruling means that Tornado Cash's smart contracts must be removed from the sanctions list, allowing 'U.S. users to use this privacy-preserving protocol again,' and wrote:

This excessive government overreach was ultimately halted.

The court also acknowledged the complexity of this situation, especially in the face of uncontrollable innovative technologies such as blockchain. The judge pointed out, 'We fully understand the real-world implications that may arise from certain uncontrollable technologies not being subject to OFAC sanctions,' but also emphasized that the court's duty is to uphold the regulations established by Congress, rather than trying to patch outdated laws.

Following this positive news, the native token of Tornado Cash, TORN, soared in price, with CoinGecko data showing that TORN surged over 500% today (27th), breaking the $20 mark.

"Incredible turnaround! The U.S. Court of Appeals overturns the Tornado Cash sanctions, and TORN skyrockets by 500%" was first published in (BlockBeats).