Law

Tornado Cash developers are facing criminal charges, and affected parties have civil lawsuits pending against the US Treasury over sanctioning the crypto mixer.

Many in the crypto industry are still reeling from an appellate court decision that the United States Department of the Treasury’s Office of Foreign Assets Control (OFAC) overstepped in sanctioning certain smart contracts associated with the cryptocurrency mixer Tornado Cash. 

On Nov. 26, the US Court of Appeals for the Fifth Circuit ruled that OFAC “exceeded its statutory authority” when it sanctioned some of Tornado Cash’s immutable smart contracts in 2022. Though the ruling did not close the door on the Treasury Department’s case, the six plaintiffs backed by Coinbase could see a policy change starting in 2025 that could impact how the courts handle addresses associated with crypto mixers.

Bill Hughes, Consensys’ senior counsel and director of global regulatory matters, told Cointelegraph that OFAC still had a “lot of authority” to sanction entities connected to Tornado Cash. However, according to Hughes, the Nov. 26 judgment would likely have the case go back down to the lower courts and have lawyers refile motions for summary judgment, a process which could “take months.”

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