Court Overturns Treasury Sanctions on Tornado Cash

A federal appeals court has ruled that the U.S. Treasury's sanctions against Tornado Cash, a crypto mixing tool, are unlawful, marking a significant legal victory for privacy and the cryptocurrency industry. The Fifth Circuit determined that the immutable smart contracts of Tornado Cash do not qualify as property under the International Emergency Economic Powers Act (IEEPA), and thus cannot be sanctioned. This ruling challenges the Treasury Department's authority, asserting that open-source software should not be penalized for the actions of a few bad actors. Despite the sanctions imposed in 2022, Tornado Cash remains operational, and sanctioned individuals can still access their assets through the platform. Coinbase, which backed the legal challenge, hailed the decision as a milestone for the rights of crypto users and the future of digital privacy. The case reflects ongoing debates about the regulation of cryptocurrency and the balance between security and privacy rights.