Us Texas Court "Us Treasury's Tornado Cash Sanctions Are Illegal"

A federal court in Texas, USA, has judged that the U.S. Treasury Department's sanctions against the cryptocurrency mixing service 'Tornado Cash' lack legal grounds. As a result, the Treasury Department is unable to blacklist the service again or revive the sanctions.

On the 28th (local time), Federal Judge Robert Pitman ruled that the Office of Foreign Assets Control (OFAC)'s action to list Tornado Cash's smart contract address on the Specially Designated Nationals (SDN) list was illegal, and permanently prohibited the enforcement of these sanctions. This is the first legal decision since Tornado Cash was sanctioned in August 2022 for allegedly assisting the North Korean hacking organization Lazarus Group in money laundering.

This lawsuit was filed in November last year by users including Joseph Van Loon. The plaintiffs argued that the sanctions were excessive, pointing out that Tornado Cash is decentralized open-source software, not pertaining to specific individuals or organizations. The initial judgment was favorable to the Treasury Department, but the Fifth Circuit Court of Appeals overturned this and granted a partial victory to the plaintiffs.

With this ruling, OFAC is unable to reinstate or impose new sanctions on Tornado Cash. OFAC had lifted the sanctions in March of this year and argued that the case should be dismissed as it was already nullified, but the court did not accept this position.