The US court has overturned the sanctions against Tornado Cash! The native Token TORN has surged 140%

The Western District Court of Texas in the United States has ordered the overturning of a previous ruling in favor of sanctions against the Cryptocurrency mixer Tornado Cash, and has requested that the case be remanded to the lower court for retrial.

The court documents state: "The court orders and rules that the judgment of the district court has been revoked, and the case will be remanded to the district court for further proceedings."

After the news came out, the native token TORN of Tornado Cash surged 140%, from $9.5 to $23.

BREAKING: Texas District Court reverses Tornado Cash sanctions. pic.twitter.com/1OuIA6vmeD

— Bitcoin Magazine (@BitcoinMagazine) January 22, 2025

The Office of Foreign Assets Control (OFAC) of the United States will designate Tornado Cash as a sanctioned entity in August 2022, because North Korea uses this mixer for cybercrime, such as money laundering stolen cryptocurrencies. Tornado Cash developer Alexey Pertsev has been sentenced to more than 5 years in prison for money laundering.

After the implementation of the sanctions, Tornado Cash user Joseph Van Loon and five other plaintiffs immediately filed a lawsuit against the U.S. Department of the Treasury, Treasury Secretary Janet Yellen, OFAC, and OFAC Director Andrea Gacki, accusing these defendants of abusing their power and exceeding their administrative authority.

The core of this legal dispute involves the International Emergency Economic Powers Act (IEEPA), which empowers the President of the United States to block any "property" of interest to foreign countries. Although US authorities have used this law to support their sanctions against Tornado Cash, the term "property" involves all things related to ownership, leading to different legal interpretations and disputes.

Tornado Cash user Joseph Van Loon and other plaintiffs argue that Tornado Cash should not be sanctioned because it is essentially a piece of software, not a specific individual or entity.

The appellate court ruled in favor of the plaintiff last November, stating that the immutability of the Tornado Cash smart contract makes the mixer an exception to the definition of 'property' as specified by IEEPA.

The appellate court's ruling stated: "In theory, if Tornado Cash developers choose to comply with sanctions against mutable smart contracts, these developers can sever these mutable smart contracts, rendering them inaccessible and unusable to anyone on the Ethereum chain."

However, they cannot cancel, adjust, disconnect, or control tamper-resistant smart contracts, such as those currently listed on the OFAC SDN list and the smart contracts mentioned above that have the issue.

The court explained that even if subject to OFAC sanctions, as long as they can access the internet, the immutable smart contract of Tornado Cash remains accessible to everyone.

Although OFAC has expanded the definition of property to include "any nature of contract," the appellate court held that an irrevocable contract is not an actual contract requiring agreement by two or more parties.

The document states: 'Immutable smart contracts only require one party to participate', Tornado Cash does not require manual execution, nor does it qualify as a 'service'. The document shows:

The International Emergency Economic Powers Act gives the President broad authority to regulate various economic transactions, but the wording is not unrestricted. Repairing regulatory blind spots or mitigating their destructive impact falls outside of our scope.

The U.S. court revokes the sanctions on Tornado Cash! The native token TORN soared 140%. This article was first published in "Block Racer".