Title: Justice Prevails for Tornado Cash as Court Permanently Bars Sanctions
Sanctions Imposition on Tornado Cash Faced Legal Inhibition by Court Order Regarding OFAC
In a groundbreaking verdict, the U.S. District Court for the Western District of Texas has prevented the U.S. Treasury from reapplying sanctions on the popular crypto mixer, Tornado Cash. This decisive victory for crypto privacy advocates comes after Judge Robert Pitman approved amendments on April 28, 2025, deeming the Treasury's actions as unlawful.
The ruling explicitly rejects the government's attempt to dodge a final judgment, following its voluntary decision to lift sanctions on Tornado Cash in March. Paul Grewal, Chief Legal Officer at Coinbase, shared the revised judgments on Twitter, expressing relief at the Court's decision.
The Office of Foreign Assets Control (OFAC) is now legally prohibited from reinstating the original sanctions, as per Grewal's notes. This marks a crucial victory for Tornado Cash, ensuring its continued operations without the threat of future U.S. government sanctions.
The Legal Battle
In an attempt to argue the case as moot after the voluntary delisting, Treasury officials cited a precedent. However, Judge Pitman applied this same precedent to assert that the officials could potentially re-enact the exact same sanctions in the future. This covers the second part of the court's mootness exception test, ultimately allowing the case to reach a final judgment.
This decision follows the Department of Justice's announcement on April 5, 2025, that it would no longer pursue criminal charges against crypto mixing services unless they're involved in illicit activities.
A New Precedent for Decentralized Finance
The case stems from OFAC's August 2022 decision to sanction Tornado Cash. OFAC claimed that the platform facilitated over $7 billion in money laundering, including funds linked to North Korean hackers. This move marked the first time U.S. authorities had sanctioned open-source software protocols rather than individuals or organizations.
In November 2024, the Fifth Circuit Court of Appeals ruled that OFAC had overstepped its authority under the International Emergency Economic Powers Act. At the time, the court determined that immutable smart contracts "are not property because they are not capable of being owned," and that over a thousand participants engaged in a "trusted setup ceremony" which prevented any updates or controls over Tornado Cash's core codebase.
The Fifth Circuit ruling set a significant precedent for how blockchain protocols are treated under U.S. law, potentially reshaping the approach of regulators towards decentralized finance services.
As Tornado Cash celebrates this significant legal victory, its co-founder, Roman Storm, continues to face personal legal challenges. He has been charged with laundering over $1 billion through the platform, and his case remains ongoing.
[1] "Tornado Cash taken off sanctions list by U.S. Treasury." The Verge. (March 17, 2023).
[2] "Tornado Cash Takes Legal Action Against U.S. Treasury over Sanctions." Nasdaq. (April 28, 2025).
[3] Coin Center. (2023). "Federal Court's Feb. 27 Decision Blocks Crypto Mixing Sanction." Document.
[4] "Fifth Circuit Court rules smart contracts are not property." CoinTelegraph. (November 14, 2024).
[5] "U.S. federal court strikes down Tornado Cash sanctions." Coindesk. (November 8, 2024).
- The U.S. District Court for the Western District of Texas barred the U.S. Treasury from reapplying sanctions on Bitcoin mixer Tornado Cash, marking a victory for crypto privacy advocates.
- In a historical decision, Judge Robert Pitman deemed the Treasury's actions as unlawful and approved amendments on April 28, 2025.
- The Office of Foreign Assets Control (OFAC) is now legally prohibited from reinstating the original sanctions on Tornado Cash, as per notes from Paul Grewal.
- This victory for Tornado Cash comes after the Department of Justice announced on April 5, 2025, that it would no longer pursue criminal charges against crypto mixing services unless they're involved in illicit activities.
- The case against Tornado Cash stems from OFAC's August 2022 decision to sanction the platform, which marked the first time U.S. authorities had sanctioned open-source software protocols.
- The Fifth Circuit Court of Appeals ruled in November 2024 that OFAC had overstepped its authority, setting a significant precedent for how blockchain protocols are treated under U.S. law.
- The court determined that immutable smart contracts "are not property because they are not capable of being owned," and that over a thousand participants engaged in a "trusted setup ceremony" prevented any updates or controls over Tornado Cash's core codebase.
- Tornado Cash's co-founder, Roman Storm, faces personal legal challenges, including charges for laundering over $1 billion through the platform, while the platform celebrates its significant legal victory.
- The ruling could potentially reshape the approach of regulators towards decentralized finance services, impacting various cryptocurrencies like Ethereum and Bitcoin, and the broader DeFi ecosystem.
