U.S. Appeals Court Overturns Treasury Sanctions on Tornado Cash

The court ruled that Tornado Cash's immutable smart contracts do not qualify as property, limiting the Treasury's authority to impose sanctions.

The Fifth Circuit Court of Appeals ruled that the U.S. Treasury's sanctions on Tornado Cash exceeded its legal authority under the International Emergency Economic Powers Act (IEEPA).
The court determined that Tornado Cash's immutable smart contracts, which operate autonomously without ownership or control, cannot be classified as property subject to sanctions.
Tornado Cash was originally sanctioned in 2022 for allegedly facilitating over $7 billion in illicit transactions, including funds tied to North Korea's Lazarus Group.
The decision is seen as a significant legal victory for privacy advocates and the cryptocurrency industry, with Coinbase supporting the legal challenge financially.
The ruling has led to a surge in Tornado Cash's native token, TORN, and sparked optimism within the decentralized finance (DeFi) sector regarding regulatory clarity for blockchain-based protocols.