The Court of the Fifth Circuit decision on Tornado Cash Wednesday sparked widespread optimism, with decentralized protocols on Ethereum and privacy-focused tokens seeing significant gains.
On Tuesday, the court ruled that immutable smart contracts are not property and cannot be punished under existing laws, signaling what some observers consider a major victory for privacy advocates.
“While the ruling does not condone money laundering, it sets a precedent for programmers to develop and release smart contract protocols without fear of sanctions, provided they do not charge fees,” a 10X Research said in a note to investors on Wednesday.
The move could also provide developers with more clarity on what they can build without falling into the regulatory crosshairs, particularly on Ethereum, which hosts the majority of decentralized applications.
“Privacy won. Smart contracts won. Tornado Cash won. And OFAC lost,” Balaji Srinivasan, former Coinbase CTO and prominent crypto entrepreneur, said Wednesday on X, formerly Twitter.
The crypto markets were immediately inspired by the news: TORN, the native token of Tornado Cash, jumped over 380% early Thursday.
While privacy tokens as a category have since declined to less than 2% of total gains over the past 24 hours, the decentralized finance market cap jumped 8.2% and another 21.5% over the week, according to CoinGecko data.
Among the biggest gainers was Uniswap (UNI), up 11% on the day to an eight-month high just above $12.50. Aave (AAVE) and Ethena (ENA) also advanced, up 8.6% and 23%, hitting their highest levels in 2.5 years and five months, respectively.
“Given that Ethereum remains the primary blockchain for DeFi, this move is viewed positively for the broader DeFi ecosystem and other protocols, particularly on the Ethereum network. This could have huge implications,” 10X wrote Research.
Meanwhile, Alexey Pertsev, the developer of Tornado Cash found guilty by Dutch court in May for a money laundering case, remains behind bars.
“I am sad to announce that, despite all our efforts, the court has decided to extend my pre-trial detention,” Pertsev said. said on Twitter last week. “This decision significantly complicates my ability to prepare the appeal, but I remain committed to continuing to fight for justice.”
Edited by Sébastien Sinclair
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