The Fifth Circuit Court of Appeals in the United States has ordered the reversal of sanctions imposed on Tornado Cash, a decentralized crypto-mixing service. The ruling marks a victory for crypto privacy advocates and sets a precedent for DeFi platforms.
Why Lift Tornado Cash Sanctions?
The sanctions, initially imposed by the Office of Foreign Assets Control (OFAC) in August 2022, were deemed an overstep of authority by the court. The OFAC had accused Tornado Cash of facilitating money laundering and sanctions evasion, but the court found that the agency had exceeded its authority in blocking the service.
The court’s decision centers on the definition of “property” under the International Emergency Economic Powers Act (IEEPA). The judges ruled that Tornado Cash’s immutable smart contracts are not “property” and cannot be blocked. This distinction shows the need for updated legal frameworks to address blockchain-related technologies.
The court’s decision has been enthusiastically received by the crypto community, with Tornado Cash’s governance token, TORN, surging over 200%. The reversal of sanctions allows Tornado Cash to resume operations, and its users can again access the service without fear of reprisal.
While the court removed Tornado Cash sanctions, its co-founder and developer, Alexey Pertsev, has been dealing with legal issues. He was arrested in August 2022 and is serving his five-year prison sentence in the Netherlands.
Positive Developments Follow Trump’s Inauguration
In addition to Tornado Cash, the crypto community has seen some positive developments within a few days of the Trump administration. The U.S. Securities and Exchange Commission (SEC) launched a Crypto 2.0 Task Force to create a clear regulatory framework for crypto assets. The move followed the departure of its chairman, Gary Gensler, who was hostile toward crypto.
Additionally, speculation about a potential Solana ETF could bring more attention and investment to the crypto market, as Trump mentioned that he will support American-based crypto projects.
Trump has also granted a full pardon to Ross Ulbricht, the founder of Silk Road, a dark web marketplace infamous for illicit activities. Ulbricht had been serving a life sentence for operating the platform. The pardon fulfills the president’s promise to the crypto community.
It’s also worth noting that Trump’s inauguration has garnered interest in crypto, with Google Trends showing a surge in searches related to crypto, including Trump’s affiliated meme token. However, the market’s performance in the short term remains uncertain, and it’s unclear whether the president will fulfill all his campaign promises to support the crypto industry.
