Just when Bitcoin, Solana, meme coins and top altcoins are flying, a US court has declared that Tornado Cash smart contracts, contrary to authorities’ claims, cannot be sanctioned.
This is a huge boost for Tornado Cash, a crypto mixer that saw its token, TORN, flash crash and usage decline to record levels following the August 2022 sanctions.
Now, in a boost for the mixer and another endorsement of crypto innovation, the Fifth Circuit Court of Appeals ruled yesterday that the Treasury Department’s sanctions against the smart contracts driving Tornado Cash were illegal.
This decision is a victory for this booming industry. This should be crucial, especially for privacy purists and anyone clamoring for innovation.
The arguments against Tornado Cash: are TORN smart contracts SAFUs?
To understand why, we have to go back to the last bull cycle of 2021. Then, as cryptocurrency prices reached new highs, Tornado Cash emerged as a tool to hide transactions on Ethereum.
Simply put, the tool allowed users to “unlink” their public crypto movements by providing a layer of anonymity.
Given the open nature of crypto transactions, this was necessary.
Unfortunately, Tornado Cash, a tool built and improved by the community, attracted nefarious agents, mostly hackers and scammers, who wanted to launder the stolen money.
Some of these reportedly include hackers acting on behalf of North Korea. The Treasury Department claimed that Tornado Cash enabled the laundering of hundreds of millions of stolen funds, some from the Ronin Hack, which caused users to lose more than $600 million.
In August Release 2022The Treasury Department’s Office of Foreign Assets Control (OFAC) sanctioned Tornado Cash addresses under the International Emergency Economic Powers Act (IEEPA), highlighting its role in facilitating illegal activity transactions .
The directive meant that US citizens could not interact with Tornado Cash.
However, as expected, there was an immediate reaction. Coinbase, one of the largest exchanges in the world, filed a lawsuit challenging the accusations. They said OFAC and the Treasury Department were overstepping their authority.
Coinbase and other blockchain proponents argue that Tornado Cash was an open protocol and that OFAC sanctioned self-executing standalone contracts that did not belong to anyone but belonged to the underlying network, in this case Ethereum, a public ledger.
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The Court’s Landmark Decision: What Does It Mean for Privacy Coins?
In yesterday’s ruling, which overturned the district court’s decision, the presiding judge decisively ruled that Tornado Cash’s smart contracts were not property and “could not be possessed” since they are autonomous.
Second, the court said OFAC was overstepping its mandate by sanctioning open source and immutable technology. The court said the agency should instead target individuals and entities that misuse the protocol for malicious purposes.
The decision recognizes that if the government decided to ban mixers like Tornado Cash, it would stifle innovation since it would amount to penalizing encryption.
Encryption and cryptography are essential to digital security and power all open source ledgers, including Bitcoin and Ethereum.
TORN prices rise 1,300% – but can the surge be sustained?
Following this well-deserved triumph, TORN .cwp-coin-chart svg path { Stroke: ; line width: ; }
Price
Trading volume in 24 hours
Last price movement over 7 days
prices soared 1,300% to nearly $40 before calming down.
(TORNUSDT)
If Tornado Cash attracts activity like before August 2022, TORN prices could rebound, even surpassing $436, printed in early 2021.
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The article Tornado Cash Triumph: You Can’t Sanction Smart Contracts, Court Rules, TORN 1,300% Rallies appeared first on .
