Another Court Directions Treasury to Raise Tornado Cash Restrictions

A federal judge in Texas ruled Tuesday that the U. S. Treasury overstepped its power by sanctioning decentralized crypto mixing Tornado Cash, crippling the government’s try to control the process.

This marks the second regulation battle for the Treasury. In November, the U. S. Fifth Circuit Court ruled  that the Treasury overstepped its power by sanctioning related eternal smart contracts.

The U. S. District Court for the Western District of Texas ruled that Tornado Cash’s immutable smart contracts could not be classified as “property ” under the International Emergency Economic Powers Act ( IEEPA ).

“It is ordered and adjudged that the judgment of the district court is reversed, and the cause is remanded…, ” the ruling states.

Following the ruling, Tornado Cash’s native token, TORN, has climbed past$ 25, an increase of over 200 % by Wednesday morning, according to CoinGecko data. It has since settled to$ 19. 78 at the time of reading.

“The eternal smart contracts at matter are not home because they are not worthy of being owned, ” the view stated, limiting the government’s ability to regulate open-source bitcoin techniques.

The Treasury ’s Office of Foreign Assets Control ( OFAC ) sanctioned Tornado Cash in August 2022, citing its alleged role in laundering$ 455 million in stolen crypto linked to notorious hackers North Korea’s Lazarus Group.

In Tuesday ’s decision, the judge flagged the boundaries of regulatory authority, noting that the IEEPA, a law granting the President economic power during crises, was not intended to target neutral, open-source program.

Even with the restrictions in place, “those eternal smart contracts remain visible to anyone with an internet connection, ” the courtroom added.

The event will then return to the district judge for further trials based on the Texas court’s view.

Tornado Cash, a gold mixing on the Ethereum blockchain, enables people to obscure exchange information by sharing money.

While designed for privacy, the application has also been greatly exploited by malignant players.

OFAC added Tornado Cash and its associated addresses to the Specially Designated Nationals ( SDN) list, prohibiting U. S. participants from interacting with it.

The judge pointed out that such agreements, being intelligent and unchangeable, may be classified under existing laws as governed assets.

But it ’s no all smooth cruising for the blockchain blender. Only last September, a New York court refused to ignore money fraud charges against co-founder Roman Storm.

Prosecutors alleged he conspired to run an unregistered income distribution company, enabling restrictions dodging and laundering through Tornado Cash.

The restrictions also led to the arrest of designer Alexey Pertsev, who remains jailed in Netherlands for supposedly laundering$ 1. 2 billion via Tornado Cash.