Tornado Cash token surges to 2-year high after US court rules ...
The price of Tornado Cash’s TORN token skyrocketed to a two-year high after a US federal appeals court ruled that the US Treasury Department’s sanctions on the platform were unlawful.
Decentralized Finance Victory
Tornado Cash, an on-chain privacy tool that uses immutable smart contracts to enable anonymous crypto transactions, found itself at the center of a legal battle after being sanctioned by the US Treasury’s Office of Foreign Assets Control (OFAC) in 2022. Allegations were made that the platform aided the laundering of over $7 billion in crypto, including stolen funds, by hacking groups linked with North Korea.
Landmark Legal Decision
On Nov. 26, the US Court of Appeals made a landmark decision by ruling that the Treasury Department had exceeded its authority in sanctioning Tornado Cash’s immutable smart contracts. These contracts, being open-source software, do not belong to any individual or foreign entity and thus cannot be subjected to sanctions.
The court's decision emphasized the significant “trusted setup ceremony” in 2020, where over 1,000 participants contributed cryptographic data to finalize Tornado Cash’s parameters. This process rendered the smart contracts immutable, negating any possibility of updates or administrative control. Governance was subsequently transferred to the Tornado Cash community through the TORN token.
The judges clarified that these contracts operate autonomously and do not meet the legal definition of property or services under the International Emergency Economic Powers Act (IEEPA). Despite OFAC's sanctions, the smart contracts have continued to operate.
Celebration Within the Crypto Community
Following the court ruling, data from CryptoSlate revealed that TORN surged to a two-year high of $40 before retracing to around $18, indicating a 400% increase within 24 hours. Although the token remains 96% below its all-time high of $436 from February 2021, the decision was met with widespread celebration in the crypto industry.
Industry leaders hailed the ruling as a significant victory for decentralized technologies and privacy rights. Coinbase’s Chief Legal Officer, Paul Grewal, highlighted the importance of protecting open-source software from unjust sanctions and ensuring that addressing illicit activities does not lead to blanket restrictions on decentralized protocols.
Bill Hughes, Consensys’ senior counsel, remarked that the judgment does not necessarily shield the entirety of Tornado Cash from future scrutiny, but rather pertains to smart contracts without administrative keys.
This ruling sets a precedent regarding the treatment of decentralized technologies by regulatory bodies and highlights the evolving landscape surrounding blockchain and cryptocurrencies. The implications of this legal decision are likely to reverberate throughout the industry and shape future regulatory approaches.
