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US Court of Appeals Drops Tornado Cash Case, Starting a New Era of Crypto Freedoms

The U.S. Court of Appeals has dismissed a case involving the crypto advocacy group Coin Center, which was brought on behalf of Tornado Cash. The Treasury Department removed Tornado Cash from its OFAC sanctions list approximately two months ago, after it had been on the list for three years. The Eleventh Circuit Court of Appeals dismissed the case, potentially bringing an end to a dispute that was never well-founded in the first place.

Coin Center believes this to be true, arguing that the court abandoned its defense of a flawed position. The court case was initiated by Coin Center, on behalf of Tornado Cash, by filing a complaint with OFAC regarding the addition of the mixing service to the sanctions list. Peter Van Valkenburgh, executive director at the Coin Center, stated that the government dropped the case because it no longer wanted to defend a broad interpretation of sanctions law. 

TORN, Tornado Cash’s token, pumped up by 14% after the news broke, but receded slightly thereafter. The price of TORN reached a high of $ 10.50, representing a substantial profit in a single day. Peter Van Valkenburgh, executive director of the Coin Center, stated that the court’s ruling concluded the court battle over the statutory authority regarding the Tornado Cash sanction. Valkenburgh described the government’s case as “dangerously overbroad”, referring to the likelihood that the government would lose their case and that they were loosely applying the law.  

Peter Van Valkenburgh, executive director of Coin Center, announced that it was officially the end of their court battle. A Fifth Circuit US judge made the judgment in November that OFAC overstepped its responsibilities by sanctioning the underlying smart contracts that power the Tornado Cash system. Valkenburgh stated that OFAC had a flawed interpretation of sanctions law and could no longer defend it. The fifth court had already determined that OFAC could not classify Tornado Cash as property because the blockchain was immutable, meaning that its state could not be changed. This all started after North Korean hackers used Tornado Cash to launder money. The developers were blamed for the actions of the hackers and are still fighting money laundering charges in court. 

Roman Storm, co-founder of Tornado Cash, is set to attend his court hearing on July 14 to face what some are describing as a harsh set of charges being brought against the tech founder. The US Securities and Exchange Commission (SEC) is responsible for the ongoing charges against Storm. The US Department of Justice (DOJ) alleges that Storm and his colleagues are responsible for laundering around $1 billion. However, Roman Storm did not launder the money himself. The Lazarus Group, a North Korean hacking collective, was responsible for the vast majority of the laundered funds. Storm is being charged with money laundering offences, yet it appears that at best, he merely enabled money laundering to occur. Storm, however, has a lot of support to fight the charges, including publicly listed company Coinbase and the Ethereum Foundation. Many crypto businesses are supporting Tornado Cash, including the Coin Center, which has devoted considerable time to challenging the validity of OFAC’s sanctioning of the Ethereum mixing service. The US government is finding it increasingly difficult to charge crypto projects because crypto entrepreneurs are earning sufficient funds to defend themselves in court. 

Coin Center, a crypto advocacy group, sued the US Treasury for sanctioning Tornado Cash. The US Treasury added Tornado Cash to the OFAC sanction list because of allegedly enabling North Korean hackers to launder stolen money. However, a separate court ruled that the sanction was not acceptable, and as a result, Tornado Cash was removed from the sanction list. Coin Center initiated a new case to ensure that OFAC could not sanction Tornado Cash again. The regulatory environment is favourable towards cryptocurrencies right now, but could change at a moment’s notice if a different administration enters the Whitehouse. Tornado Cash is a handy tool for privacy enthusiasts. It could be one of the reasons why many traders continue to use Ethereum. It features a straightforward platform but provides military-grade security. The very fact that North Korean hackers used the service is a testament to its power as a financial tool. It is also proof that Ethereum’s system works and can be further developed to enhance and radically alter the way we conduct business.

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