The Appeals Court had previously determined that the Treasury Department overstepped its authority by sanctioning the mixer in a previous ruling.
In a ruling that could indicate a transition toward more favorable regulation of privacy technologies in the digital asset space, a Texas court cancelled the sanctions against Tornado Cash, the cryptocurrency mixing protocol.
U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) sanctioned Tornado Cash in August 2022 in connection with allegations that the North Korean hacking group Lazarus used the protocol to launder more than $455 million in stolen digital assets. The case commenced on those grounds.
The Appeals Court of ‘s-Hertogenbosch sentenced developer Alexey Pertsev to five years and four months in prison for laundering $1.2 billion through the platform on May 14, 2024, as a result of the sanctions that led to his detention. Pertsev remains in custody, despite Tornado Cash’s recent legal victory.
The judges ordered the lifting of OFAC’s sanctions and the remanding of the case for additional proceedings, as indicated in documents submitted to the U.S. District Court for the Western District of Texas on January 21.
Six Tornado Cash users lodged an appeal on November 26, 2024, which resulted in the decision. The respondent contended that OFAC had exceeded its authority by asserting that Tornado Cash’s immutable smart contracts are not “property” of a foreign entity or individual and, as a result, are not subject to sanctions under the IEEPA (International Emergency Economic Powers Act).
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