- As per the court filing released on January 21, the US District Court for the Western District of Texas has altered the OFAC sanctions against the crypto mixing protocol.
- The six plaintiffs claimed that blockchain transactions can be traced, which is the reason some crypto users wish for an extra option to keep their transactions private.
- The court judgment was made after six Tornado Cash users filed an appeal against the OFAC’s sanctions.
A court in the United States has placed the sanctions against Tornado Cash protocol in a crucial win for privacy-keeping technologies that may indicate more revolution-friendly crypto laws in the United States.
The Treasury Office of Foreign Assets Control (OFAC) sanctioned cryptocurrency mixing protocol Tornado Cash three years ago in August for reportedly aiding the North Korean Lazarus Group in laundering more than $455 million worth of stolen virtual assets.
Alteration of the OFAC sanctions
The sanctions resulted in the arrest of the developer of Tornado Cash Alexey Pertsev, who was convicted of money laundering by Dutch judges at the s-Hertogenbosch Court of Appeal on May 14, 2024. The Court sentenced the developer to five years and four months in jail for laundering around $1.2 billion worth of illegal assets on the platform.
As per the court filing released on January 21, the US District Court for the Western District of Texas has altered the OFAC sanctions against the crypto mixing protocol, in the key legal victory for the case.
The filing mentioned that it is instructed and determined that the judgment of the district court is altered, and the root is remanded to the district court for further proceedings in agreement with the opinion of this court.
At the same time, Pertsev is still in custody for money laundering-associated charges regardless of operating a non-custodial crypto mixer, which never grips or controls the funds of the user. At the time of his March trial, Pertsev contended that he could not be held responsible for the actions of those who exploited the Tornado Cash protocol for corrupt or illicit purposes.
Court’s denial
The court did not accept this, claiming that if Pertsev along with other co-founders of Tornado Cash had actually wished to avoid criminals from misusing the protocol, they would have taken further steps to enhance security.
The court judgment was made after six Tornado Cash users filed an appeal against the OFAC’s sanctions. On November 26, an appeal was issued that mentioned that OFAC surpasses its “statutory authority” by blacklisting Tornado Cash in 2022.
The filing included that we hold that smart contracts of Tornado Cash are not the property of a foreign national or entity, which means they can not be hindered under IEEPA.
The six plaintiffs also claimed that blockchain transactions can be traced, which is the reason some crypto users wish for an extra option to keep their transactions private. The Tornado Cash sanctions lifted some concerns for developers of privacy-keeping technologies.
