Tornado Cash Crypto Update: Legal Win Spurs TORN Surge

Tornado Cash Crypto Update: TORN Token Soars After Court Ruling

The United States cryptocurrency community witnessed a landmark decision as Tornado Cash users secured a significant win against the Treasury’s Office of Foreign Assets Control (OFAC). On November 26, the Fifth Circuit Appeals Court reversed a prior ruling, declaring that OFAC exceeded its authority when it sanctioned Tornado Cash’s immutable smart contracts.

Appeals Court Rules Smart Contracts Are Not “Property”

The three-judge panel ruled that immutable smart contracts—essentially privacy-enhancing software—do not qualify as "property" under the International Emergency Economic Powers Act (IEEPA). As these smart contracts are autonomous and lack ownership or control by any entity, the court found OFAC’s actions unlawful. “They cannot be blocked under federal law,” stated Bill Hughes, a Consensys lawyer, emphasizing that OFAC’s interpretation of its authority was overly broad.

OFAC Overreach Sparks Mixed Reactions

The court’s ruling clarifies that while Tornado Cash’s smart contracts must be removed from the sanctions list, it does not absolve Tornado Cash as a whole. Legal experts, including Hughes, cautioned that other aspects of Tornado Cash remain within OFAC’s reach. The decision, however, reaffirms the limitations of governmental authority over decentralized technologies, sparking relief among crypto advocates.

A Year-Long Legal Battle Comes to a Turning Point

This decision stems from a 2022 lawsuit where six Tornado Cash users, supported by Coinbase, challenged OFAC’s addition of 44 smart contract addresses to the Specially Designated Nationals (SDN) list. Initially dismissed by a Texas federal court, the case gained traction upon appeal. The November 26 ruling represents a pivotal moment, requiring the removal of smart contracts from the sanctions list and restoring their legal use by U.S. citizens.

Market Impact: TORN Token Skyrockets

In the wake of the judgment, Tornado Cash’s native token, TORN, surged nearly 900%, hitting a two-year high of $34.98. The decision has reinvigorated discussions about the balance between privacy, decentralization, and regulatory oversight. While challenges remain, this ruling marks a milestone for the blockchain industry and its pushback against regulatory overreach.