Court rules sanctions exceeded authority, significant victory for crypto privacy
Recently, the U.S. Federal Appeals Court ruled on the Tornado Cash case, asserting that the U.S. Treasury's sanctions against the mixing protocol exceeded its authority, requiring the lifting of sanctions on Tornado Cash's immutable smart contracts. This ruling overturned a district court decision from August of this year and laid the groundwork for the legitimacy of crypto privacy technology.
The court ruled that Tornado Cash's smart contracts do not fall under the definition of 'property' in the International Emergency Economic Powers Act (IEEPA) because these contracts cannot be controlled or owned. The ruling stated: 'Immutable smart contracts are not property of foreign nations or entities, and therefore cannot be frozen under IEEPA.' The court also emphasized that the Office of Foreign Assets Control (OFAC) of the Treasury exceeded the authority granted by Congress in this case.
Source: U.S. Federal Appeals Court The court ruled that Tornado Cash's smart contracts do not fall under the definition of 'property' in the International Emergency Economic Powers Act (IEEPA) because these contracts cannot be controlled or owned.
Since being sanctioned in August 2022, Tornado Cash has faced significant legal challenges. The U.S. Treasury accused the protocol of being used for money laundering over $7 billion since its inception in 2019, including funds from the Axie Infinity hack. However, crypto companies like Coinbase quickly filed lawsuits, arguing that these sanctions were overly arbitrary and violated the law.
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Smart contracts removed from blacklist, $TORN price surges
After the court ruling was announced, the native token of Tornado Cash, $TORN, rapidly surged in price, skyrocketing over 500% within just a few hours, breaking the $20 mark and reaching a peak of $34.98, a new two-year high (as of the time of writing, the price of $TORN was $19.33). According to CoinGecko data, $TORN fell below $8 last year due to sanction pressures, and has now successfully achieved a strong rebound.
Source: CoinGecko TORN successfully rebounds strongly after the court ruling is announced
Coinbase's Chief Legal Officer Paul Grewal praised this as a 'historic victory' on social media platform X, stating: 'These smart contracts will be removed from the sanctions list, and U.S. users will once again be able to use this privacy-preserving protocol.' He further emphasized that this ruling demonstrates that government overreach cannot stand.
However, experts warn that despite the sanctions on smart contracts being lifted, this does not mean Tornado Cash is completely free from risks. Consensys lawyer Bill Hughes pointed out: 'This case only involves smart contracts without management keys, and does not rule out other forms of regulatory challenges.'
Future impact on crypto privacy technology
This ruling has far-reaching implications for the crypto industry, particularly regarding the legal positioning of privacy technology. The court clearly pointed out that existing laws have not adequately considered the characteristics of decentralized technology, leaving room for discussion in future legislation. The judge mentioned in the ruling:
'We fully recognize the real-world challenges posed by certain uncontrollable technologies, but we must defend the legal framework established by Congress, rather than arbitrarily amend it.'
Supporters of crypto privacy technology generally believe this case is a key step in promoting the legitimacy of decentralized protocols. However, critics worry that such a ruling may encourage risks of illegal activities like money laundering. Nevertheless, the Tornado Cash case undoubtedly provides important reference for seeking legitimate status for privacy technology under legal frameworks.
In the future, the crypto industry will continue to focus on the legal and regulatory trajectory of Tornado Cash while looking forward to more similar technologies thriving under reasonable regulation.
[Disclaimer] The market has risks, and investment should be cautious. This article does not constitute investment advice, and users should consider whether any opinions, views, or conclusions in this article are suitable for their specific circumstances. Investment based on this is at one's own risk.
The article 'TORN skyrockets 500%! Tornado Cash case ruled excessive, mixing services breathe easy' was first published in 'Crypto City'
