Court Ruling Protects Tornado Cash Users in Privacy Case
A recent ruling by the U.S. Court of Appeals is a win for users of Tornado Cash, a tool that focuses on privacy in the world of cryptocurrency. The court made a decision in the case of Tornado Cash (Van Loon v. Treasury), stating that the decentralized software used to protect digital privacy is not subject to U.S. sanctions law.
The story began back in August 2022 when the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) imposed sanctions on Tornado Cash. OFAC accused the platform of aiding in illicit activities like money laundering by hiding cryptocurrency transaction origins.
Tornado Cash operates using automated code called “immutable smart contracts,” with a purpose to enhance user privacy by keeping digital currency transaction details private.
In response to the sanctions, a group of Tornado Cash users, which included developers and cryptocurrency advocates, pushed back. They argued that OFAC had gone beyond its power. Their point was that Tornado Cash is just a tool, and many users utilize it for legal purposes such as safeguarding their financial information.
The lawsuit asked whether immutable smart contracts could be considered “property” owned by foreign entities, allowing sanctions to be imposed on them. The Fifth Circuit sided with the users, stating OFAC had overstepped its boundaries. They made it clear that software like Tornado Cash’s smart contracts cannot be seen as property owned by individuals or groups, foreign or domestic. This ruling is essential as U.S. sanction laws target people and businesses, not computer code.
The court recognized that privacy tools like Tornado Cash serve legitimate goals. It underlined that protecting financial privacy isn’t inherently illegal and tools like these can be used for various reasons, from protecting personal finances to securing business transactions.
This ruling represents a critical moment for supporters of cryptocurrency, emphasizing the need for privacy while limiting government control of digital platforms.
