- Tornado Cash cryptocurrency increased 150% following new keys in the trial.
- An American court reported that the government could not contest the last legal loss.
- Cryptographic lawyers wonder if the cryptographic mixer will become available.
The cryptocurrency associated with the Tornado Cash has dropped more than a third in the last 24 hours after a judicial case stimulated a peak of 150% of its value on Wednesday.
The roller coaster roller coaster was triggered by the news that the United States government did not oppose a court decision that has eviscerated Tornado sanctions, which, according to the authorities, threatens national security.
Development has devoted a major victory for defenders of privacy.
“It is an absolute victory,” wrote Preston Van Loon, an applicant in the case, on X.
“A victory for unstoppable applications. A victory for online financial life. A victory for decentralization. A victory for Ethereum.
Stolen crypto
In 2022, the Office for the Foreign Assets Control of the American Treasury, or OFAC, sanctioned the Tornadians in cash, citing the popularity of the protocol with the North Korean pirates who used it to whiten the stolen crypto.
This crypto was then used to finance the Pariah nation’s nuclear weapons program, according to US officials.
The following year, six Tornado Cash users continued the OFAC and argued that the agency had made an error by prohibiting intelligent contracts at the heart of the platform.
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The law, according to them, did not cover software but rather people and entities such as businesses. The government did not agree and, in August 2023, an American court ruled largely in favor of the OFAC.
Famous cause
But the case had become a cause of the famous privacy defenders, especially after three tornado cash developers were responsible for facilitating money laundering in the United States and the Netherlands.
Led by the user Van Loon, the complainants appealed the decision of the American court. In November, a court of appeal slowed down with them.
The panel of the three judges of New Orleans concluded that IT programs, in this case, the intelligent contracts employed by Tornado Cash, are not “sanctioned” in the same way as people or businesses.
“We believe that the immutable intelligent contracts of Tornado Cash (the lines of the software code in matters of confidentiality) are not the” property “of a national or a foreign entity”, wrote the court in its opinion of 34 pages.
Two ways
On Tuesday, the appeal judges reported that the Treasury had not asked the court to reconsider this opinion and ordered a lower court based in Texas to remedy the situation.
This could be two ways, according to Matt McGuire, a partner of Arktouros, a law firm specializing in the compliance of the sanctions and deffi. The lower court could “cancel” the designation of OFAC in cash of tornado as a sanctioned entity.
This would allow residents to start using the crypto mixer again, he said DL News.
On the other hand, the court could only raise the sanctions of Van Loon and its co-plagues.
“This would allow complainants to use intelligent contracts, but the designation (sanctions) would still be in force for all other American people,” said McGuire.
If the OFAC wants to continue to defend the sanctions, it has another option: it could appeal the decision at the United States Supreme Court before February 24.
But that seems unlikely, according to Peter Van Valkenburgh, executive director of the Crypto Think Tank Coin Center.
“This is good news but not the end of history,” he wrote on X, referring to the ordinance of the Court of Appeal.
‘Impossible nighment’
When the United States has sanctioned the Tornado in cash, the industry yelled. The protocol was just a tool, although made from lines of code. Would Washington sanction a book or a hammer?
Van Loon and other users of Tornado Cash, funded by Crypto Exchange Coinbase, continued the Treasury Department for violating the financial freedom of the Americans and their constitutional right to freedom of expression.
The Tyler Almeida co-layer, for example, had used the protocol to donate to Ukraine after being invaded by Russia, fearing that his donation would otherwise draw the attention of the “hacking groups sponsored by the Russian state ”, according to the trial.
Others from the industry intervened to support them.
“Like any tool – indeed, like the Internet itself – software like Tornado Cash can be used badly for illicit purposes,” wrote two of the main defense groups of the industry in a memory filed In the name of Van Loon.
“But it is used mainly for legitimate and socially precious reasons.”
Long
It was a long time – the sanctions were issued in the name of national security, and the courts often get back to government agencies in such cases, said lawyers previously DL News.
In a notice of August 2023, judge Robert Pitman, of the American district court of the western district of Texas, quickly worked the arguments put forward by Van Loon and Company.
Although the government cannot prohibit someone from making a donation, let’s say, Greenpeace, there is no constitutional right to do so using a particular platform, said the judge.
He also found that the Treasury Department was in its power to sanction the Tornadians in cash and was not convinced by the argument that the protocol was decentralized.
“It is regrettable that it was in many ways a (case) which was almost impossible to win,” said Evan Zinaman, lawyer and founder of the Crypto law firm DL News at the time.
OFAC exceeds
But Coinbase said he would finance a call. And it worked.
“The OFAC has exceeded its authority defined by the congress,” wrote the committee of the Court of Appeal of three judges in its November opinion.
Admittedly, the court recognized the importance of dealing with national security threats online.
But the panel found that the law invoked to sanction the tornado – the international law on the 47 -year -old economic powers – was poorly suited to “target modern technologies such as crypto -melange software”.
Warning
If the congress wants to take measures against platforms based on blockchain to protect national security, it should adopt another law, the court suggested.
But legal experts warned too much about the American appeal decision.
“While we have to celebrate this, we have to temper our celebration,” said Reuben Yap, co-founder of Privacy Protocol Firo and former partner of the Malaysian law firm Reddi & Co Advocates, said previously DL News.
“This only covers if intelligent contracts can be sanctioned and not necessarily protect the developers of these protocols.”
Developers
Indeed, two tornado cash developers are found in disastrous straits.
In August 2023, Roman Storm was accused of three conspiracy chiefs: committing money laundering; operate a silver transmission company without license; And to violate American sanctions.
His trial begins in April and risks prison decades if he is convicted.
Alexey Pertsev, another promoter of Tornado Cash, was sentenced to five years in prison by a Dutch court in 2024. He appealed his conviction.
A Pertsev lawyer said she would plan to use the American Court of Appeal sections to help appeal her money laundering conviction.
“Some of the aspects that have been treated before this court are also relevant to the Dutch case,” said Judith de Boer, lawyer for Pétsev DL News in November.
Federal prosecutors are trying to prevent Storm from doing the same.
“Van Loon has no impact on this case,” the prosecutors wrote in a file last week.
“Van Loon is based on a factual conclusion according to which the government does not only dispute, but said in the indictment: Tornado cash pools are immutable intelligent contracts.”
Aleks Gilbert is DL News“DEFI correspondent based in New York. You can contact him at Aleks@dlnews.com.
