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Texas court reverses Tornado Cash sanctions worth $455M

Texas court reverses Tornado Cash sanctions worth $455M

GrafaGrafa2025/01/23 02:10
By:Liezl Gambe

A recent ruling by a Texas court has overturned the sanctions imposed on Tornado Cash (CRYPTO:TORN), a cryptocurrency mixing protocol, marking a pivotal moment for privacy-focused technologies in the crypto space.

The U.S. Treasury’s Office of Foreign Assets Control (OFAC) originally sanctioned Tornado Cash in August 2022, alleging its involvement in laundering over $455 million linked to North Korea's Lazarus Group.

This decision led to significant legal repercussions, including the arrest of Tornado Cash developer Alexey Pertsev, who was sentenced to five years and four months for money laundering in May 2024.

On January 21, 2025, the U.S. District Court for the Western District of Texas ruled against the OFAC sanctions, stating that the judgment should be reversed and remanded for further proceedings.

The court emphasised that Tornado Cash's smart contracts are not considered property under the law, thus cannot be subject to sanctions.

The plaintiffs argued that OFAC had exceeded its authority by blacklisting Tornado Cash, claiming that immutable smart contracts do not belong to any foreign national or entity.

"We hold that Tornado Cash’s immutable smart contracts… cannot be blocked under IEEPA," they stated.

Despite this legal victory, Pertsev remains incarcerated on related charges.

During his trial, he contended that he should not be held accountable for how users employed the Tornado Cash protocol.

The ruling has sparked discussions about the regulatory landscape surrounding decentralised technologies.

Matthew Niemerg, co-founder of Aleph Zero (CRYPTO:AZERO), noted that developing compliant privacy protocols will be crucial moving forward.

This decision could signify a shift in how U.S. authorities regulate privacy-preserving technologies, potentially allowing more innovation while balancing compliance with anti-money laundering measures.

The implications of this ruling extend beyond Tornado Cash, as it may influence future regulations affecting decentralised platforms and their developers.

At the time of reporting, the Tornado Cash (TORN) price was $19.56.

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Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

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