- A Texas court has permanently blocked the US Treasury from relisting crypto mixer Tornado Cash on its sanctions list.
- Judge Robert Pitman rejected the Treasury’s argument that the case was “moot” after Tornado Cash was removed from the sanctions list last month.
- The ruling permanently enjoins the Treasury from enforcing the sanction and declares previous enforcement “unlawful.”
A Texas federal court ruled Monday that the US Treasury’s Office of Foreign Assets Control (OFAC) is permanently barred from relisting cryptocurrency mixer Tornado Cash on its sanctions list. The ruling by the US District Court for the Western District of Texas rejected the Treasury’s claim that the case no longer required further judgment after the mixer was removed from the sanctions list in March.
Judge Robert Pitman issued the decisive ruling after determining that the Treasury might have otherwise attempted to reinstate the same designation in the future. “Rather than acknowledge that the Fifth Circuit’s order required delisting Tornado Cash, Defendants state that they exercised their ‘discretion’ in deciding to do so based on more general policy and legal considerations,” Judge Pitman stated in his ruling.
Background on the Sanctions Battle
The Treasury initially sanctioned Tornado Cash in 2022, alleging it had facilitated the laundering of approximately $7 billion, including funds linked to North Korea‘s Lazarus group. After years of legal challenges, the mixer was removed from the sanctions list last month, but the Treasury argued this action made the case “moot,” potentially leaving the door open for future relisting.
Coinbase’s Chief Legal Officer described the Treasury’s arguments as “nonsense” in a Twitter post sharing the court’s decision. According to court documents shared on social media, the Treasury had twice requested lengthy delays before claiming the case no longer required judicial resolution.
Implications of the Court Ruling
The court’s ruling includes amendments that leave the Treasury “permanently enjoined” from enforcing sanctions against Tornado Cash and explicitly labels its previous enforcement “unlawful.” This represents a significant victory for privacy advocates and users of mixing services who had challenged the government’s authority to sanction the protocol.
The case highlights ongoing tensions between regulatory authorities seeking to combat money laundering and the cryptocurrency community’s concerns about privacy and autonomy in digital finance. With this ruling, the court has established a precedent that may influence how the Treasury approaches similar sanctions in the future.
The decision comes after the Fifth Circuit Court had previously ruled against the government in November, setting the stage for Monday’s final judgment that provides clarity and closure to the prolonged legal battle over Tornado Cash’s regulatory status.
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