A federal appeals court overturned US Treasury sanctions on Tornado Cash, an Ethereum-based privacy tool. The court ruled that Tornado Cash’s smart contracts cannot be sanctioned as they are not classified as “property,” though misuse of the platform remains punishable.
Smart Contracts Protected, Misuse Targeted
The ruling declared that Tornado Cash’s decentralized, immutable smart contracts are exempt from sanctions, but users engaging in illicit activities remain liable. Circuit Judge Don Willett suggested Congress may need to update laws to address emerging technologies like crypto mixers.
TORN Token Surges
Following the decision, Tornado Cash’s governance token (TORN) skyrocketed 435%, trading at $19.06 late Tuesday, signaling optimism in the privacy-focused crypto market.
Tornado Cash’s Sanctions and Revival
Sanctioned in 2022 for enabling over $7 billion in laundered funds, Tornado Cash’s activity initially plummeted. However, in 2024, its usage rebounded, with $1.8 billion processed in the first half of the year despite ongoing legal challenges.
A Milestone for Privacy Advocates
The decision marks a significant moment for the blockchain industry. Paul Grewal of Coinbase hailed it as a “historic win” for privacy and innovation, underscoring the complex balance between regulation and technological freedom.
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