Texas Court Reverses Tornado Cash Sanctions

A January 21 court filing revealed that the United States District Court for the Western District of Texas reversed sanctions against the crypto mixer Tornado Cash, which led to a sharp rise in the value of its token, TORN.

Tornado Cash Sanctions Reversed, TORN Token Surges

The ruling formally overturned the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) sanctions against Tornado Cash, which had been imposed in August 2022 due to allegations of facilitating illicit digital asset laundering by malicious actors, including North Korea.

🇺🇸US Court of Appeals reverses Tornado Cash sanctions.

Winning everyday… pic.twitter.com/sZrxMhZMGL

— Bitcoin Archive (@BTC_Archive) January 22, 2025

Tornado Cash developer Alexey Pertsev was sentenced to five years and four months in prison on money laundering charges, following his arrest in August 2022.

Fellow developers Roman Storm and Roman Semenov were later criminally charged in August 2023 for allegedly assisting with the laundering of over $1 billion through the protocol.

The sanctions and subsequent legal proceedings stirred tensions among U.S. lawmakers and officials, prompting the broader crypto lobby to pursue litigation against former Federal Reserve Chair Janet Yellen.

The court document stated that the earlier judgment was reversed and remanded for further proceedings in line with the appellate court’s opinion.

The announcement had a notable impact on the cryptocurrency market, with TORN’s value seeing a sharp increase.

Court Decision Highlights Smart Contract Implications for Tornado Cash

The reversal is seen as a victory for decentralized software proponents, as the court determined that Tornado Cash’s “smart contracts” cannot be deemed property under the International Emergency Economic Powers Act.

1/ Today, the Court of Appeals for the Fifth Circuit issued a judgement reversing the OFAC sanctions on Tornado Cash, marking an important victory for the freedom of software developers everywhere.

— Blockchain Association (@BlockchainAssn) January 22, 2025

The Blockchain Association emphasized the neutrality of technology in a statement on X, stating, “Technology is a tool that can be used, or misused, by anyone. Our government should penalize the bad actors that abuse these tools rather than the tools themselves.”

Roman Storm, facing up to 45 years in prison, expressed concern over the broader implications of his charges, stating, “The charges against me threaten to criminalize software development itself. If successful, the implications could extend far beyond the crypto industry, impacting every software developer.”

The ruling sparked reactions across the cryptocurrency community, with many taking to social media to express their views.

GM and happy Tornado Cash day to all those who celebrate

— BowTiedDevil (@BowTiedDevil) January 22, 2025

X user @BowTiedDevil posted, “GM and happy Tornado Cash day to all those who celebrate.”

The sentiment was echoed by others who regarded the decision as a step forward for decentralized software and smart contracts.