Crypto privacy tool Tornado Cash no longer faces sanctions from the United States after a Texas district court on Monday found in favor of the Treasury Department.
The battle started in 2022, when the Treasury’s Office of Foreign Assets Control (OFAC) sanctioned Tornado Cash as it was alleged to be money laundering.
But critics complained that OFAC overstepped by going after the tool’s underlying smart contracts—bits of software code that automatically execute on the blockchain. A federal appeals court subsequently held that OFAC had exceeded its statutory powers.
In March 2024, OFAC removed Tornado Cash from its sanctions list. But instead of admitting the court forced them to do it, they claimed it was their own decision, based on policy. The plaintiffs in the case — users of Tornado Cash — disagreed. They said OFAC was trying to avoid an official court judgment by backing down at the last minute.
Judge Robert Pitman ruled on Monday that the issue was not moot. He sided with the plaintiffs that OFAC’s action was illegal and that the agency is prohibited indefinitely from sanctioning Tornado Cash again, except when it acquires new legal basis. He cautioned that OFAC kept the door open to reimpose sanctions in the future, which was unacceptable.
The U.S. Department of Justice (DOJ) is still pursuing criminal charges against the two developers of Tornado Cash, Roman Storm and Roman Semenov. They were charged in 2023 for allegedly helping with money laundering, running an unlicensed money service, and breaking U.S. sanctions. Semenov is still on the U.S. sanctions list.
Earlier this month, Deputy Attorney General Todd Blanche instructed DOJ personnel to focus more narrowly on crypto cases. They should cease targeting exchanges, mixers, or wallets based on users’ activity, particularly if it is unintentional. Investigations that fail to adhere to these new guidelines must be abandoned, and current cases will be reconsidered.
This policy change has already influenced other cases, such as one against Samourai Wallet’s creators. Attorneys in that case requested additional time to decide whether to dismiss the charges based on the new policy.
Crypto officials and legal defenders have called on President Donald Trump to end what they term a crackdown on open-source software, hoping this decision puts an end to legal pressure on developers who are merely creating privacy tools.
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