Appeals court tosses sanctions on Tornado Cash crypto mixer | CyberScoop<\/title> <meta name=\"description\" content=\"The U.S. Fifth Circuit Court of Appeals ruled that the Treasury Department overstepped its authority by sanctioning Tornado Cash.\"> <link rel=\"canonical\" href=\"https:\/\/cyberscoop.com\/tornado-cash-sanctions-overturned-lazarus-group\/\"> <meta property=\"og:locale\" content=\"en_US\"> <meta property=\"og:type\" content=\"article\"> <meta property=\"og:title\" content=\"Appeals court tosses sanctions on Tornado Cash crypto mixer\"> <meta property=\"og:description\" content=\"The U.S. Fifth Circuit Court of Appeals ruled that the Treasury Department overstepped its authority by sanctioning Tornado Cash.\"> <meta property=\"og:url\" content=\"https:\/\/cyberscoop.com\/tornado-cash-sanctions-overturned-lazarus-group\/\"> <meta property=\"og:site_name\" content=\"CyberScoop\"> <meta property=\"article:published_time\" content=\"2024-11-27T16:51:59+00:00\"> <meta 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content=\"https:\/\/cyberscoop.com\/wp-content\/uploads\/sites\/3\/2023\/01\/cropped-cs_favicon-2.png?w=270\"> <\/head><body class=\"post-template-default single single-post postid-82746 single-format-standard\" id=\"readabilityBody\"> <a href=\"https:\/\/cyberscoop.com\/tornado-cash-sanctions-overturned-lazarus-group\/#main\" class=\"skip-to-content-link visually-hidden-focusable\">Skip to main content<\/a> <\/p>\n<div class=\"ad ad--top ad--top-desktop\">\n<div class=\"ad__inner\"> <span class=\"screen-reader-text\">Advertisement<\/span> <\/div>\n<\/div>\n<p> <main id=\"main\" role=\"main\" tabindex=\"-1\"> <\/p>\n<div class=\"ad ad--top ad--top-mobile\">\n<div class=\"ad__inner\"> <span class=\"screen-reader-text\">Advertisement<\/span> <\/div>\n<\/div>\n<section id=\"stickybar\" class=\"stickybar stickybar--newsletter js-stickybar\" readability=\"0.82\"> <button class=\"stickybar__close js-stickybar-close\" aria-controls=\"stickybar\"> <svg class=\"icon icon--close\" width=\"21\" height=\"22\" viewBox=\"0 0 21 22\" fill=\"none\"><path d=\"m.822.518-.805.805L9.695 11 .017 20.678l.805.805 9.678-9.678 9.677 9.678.806-.805L11.305 11l9.678-9.677-.806-.805-9.677 9.677L.822.518Z\" fill=\"currentColor\" \/><\/svg> <span class=\"visually-hidden\">Close<\/span> <\/button> <\/section>\n<article class=\"single-article content\">\n<div class=\"single-article__container js-single-article-content\">\n<header class=\"single-article__header \" readability=\"25.181937172775\">\n<div class=\"single-article__header-content\" readability=\"34.136239782016\">\n<ul class=\"single-article__eyebrow\">\n<li class=\"single-article__category\"> <a class=\"single-article__category-link\" href=\"https:\/\/cyberscoop.com\/tornado-cash-sanctions-overturned-lazarus-group\/\"> <span>Cybercrime<\/span> <\/a> <\/li>\n<\/ul>\n<p> The mixer was sanctioned after a North Korea hacking group used the software to launder more than $455 million. <\/p>\n<p>  <br \/>\n<audio id=\"audio-player\" src=\"https:\/\/wp-tts-cdn.api.scpnewsgrp.com\/cyberscoop\/82746\/english.openai.mp3\"><\/audio> <\/p>\n<div readability=\"11\">\n<div>\n<p>Listen to this article<\/p>\n<p>  <\/p>\n<p>0:00<\/p>\n<\/p><\/div>\n<p>  <\/p>\n<p> <span id=\"tts-tooltip\">Learn more.<\/span> <span> This feature uses an automated voice, which may result in occasional errors in pronunciation, tone, or sentiment. <\/span> <\/p>\n<\/div>\n<p>  <\/div>\n<div class=\"single-article__cover-wrap\">\n<figure class=\"single-article__cover\"> <img data-recalc-dims=\"1\" fetchpriority=\"high\" width=\"640\" height=\"426\" src=\"https:\/\/i0.wp.com\/ddi.mohflo.net\/wp-content\/uploads\/2024\/11\/appeals-court-tosses-sanctions-on-tornado-cash-crypto-mixer.jpg?resize=640%2C426&ssl=1\" class=\"single-article__cover-image wp-post-image\" alt=\"bitcoin trading, cryptocurrency, crypto mixing, FinCEN, Treasury, ransomware proceeds\" decoding=\"async\" fetchpriority=\"high\" srcset=\"https:\/\/ddi.mohflo.net\/wp-content\/uploads\/2024\/11\/appeals-court-tosses-sanctions-on-tornado-cash-crypto-mixer.webp 1920w, https:\/\/ddi.mohflo.net\/wp-content\/uploads\/2024\/11\/appeals-court-tosses-sanctions-on-tornado-cash-crypto-mixer.webp?resize=300,200 300w, https:\/\/ddi.mohflo.net\/wp-content\/uploads\/2024\/11\/appeals-court-tosses-sanctions-on-tornado-cash-crypto-mixer.webp?resize=768,512 768w, https:\/\/ddi.mohflo.net\/wp-content\/uploads\/2024\/11\/appeals-court-tosses-sanctions-on-tornado-cash-crypto-mixer.webp?resize=1024,683 1024w, https:\/\/ddi.mohflo.net\/wp-content\/uploads\/2024\/11\/appeals-court-tosses-sanctions-on-tornado-cash-crypto-mixer.webp?resize=1536,1024 1536w, https:\/\/ddi.mohflo.net\/wp-content\/uploads\/2024\/11\/appeals-court-tosses-sanctions-on-tornado-cash-crypto-mixer.webp?resize=600,400 600w, https:\/\/ddi.mohflo.net\/wp-content\/uploads\/2024\/11\/appeals-court-tosses-sanctions-on-tornado-cash-crypto-mixer.webp?resize=252,168 252w, https:\/\/ddi.mohflo.net\/wp-content\/uploads\/2024\/11\/appeals-court-tosses-sanctions-on-tornado-cash-crypto-mixer.webp?resize=506,337 506w, https:\/\/ddi.mohflo.net\/wp-content\/uploads\/2024\/11\/appeals-court-tosses-sanctions-on-tornado-cash-crypto-mixer.webp?resize=1013,675 1013w, https:\/\/ddi.mohflo.net\/wp-content\/uploads\/2024\/11\/appeals-court-tosses-sanctions-on-tornado-cash-crypto-mixer.webp?resize=1265,843 1265w\" sizes=\"(max-width: 1013px) 100vw, 1013px\"><figcaption> (Getty Images) <\/figcaption><\/figure>\n<\/p><\/div>\n<\/header>\n<div class=\"single-article__content\">\n<div class=\"single-article__content-inner has-drop-cap\"> <html readability=\"34.243902439024\"><body readability=\"70.558605101711\"><\/p>\n<p>The U.S. Fifth Circuit Court of Appeals ruled Tuesday that the U.S. Treasury Department exceeded its legal authority when it sanctioned the cryptocurrency mixer Tornado Cash in 2022. <\/p>\n<p>The court\u2019s decision centered on whether Tornado Cash, a tool designed to anonymize cryptocurrency transactions, constitutes \u201cproperty\u201d under the International Emergency Economic Powers Act (IEEPA). A three-judge panel concluded that Tornado Cash\u2019s immutable smart contracts \u2014 automated and self-executing lines of code \u2014 do not meet this classification. Judge Don Willett, writing for the panel, underscored that the authority granted by the IEEPA allows the Treasury Department to sanction property, not technology.<\/p>\n<p>The sanctions were imposed by the Treasury Department\u2019s Office of Foreign Assets Control (OFAC) in August 2022, citing Tornado Cash\u2019s role in laundering more than $7 billion in cryptocurrency, which included $455 million allegedly stolen by North Korea\u2019s Lazarus Group.<\/p>\n<p>As the sanctions went into effect, they severely restricted the use of Tornado Cash, causing a dramatic drop in activity.<\/p>\n<div class=\"ad ad--inline_1 \">\n<div class=\"ad__inner\"> <span class=\"screen-reader-text\">Advertisement<\/span> <\/div>\n<\/div>\n<p>The legal challenge against these sanctions was spearheaded by six users of Tornado Cash, who were financially backed by Coinbase, the largest cryptocurrency exchange in the United States. They contended that because the smart contracts underpinning Tornado Cash could not be owned or controlled by any entity, they should not have been subject to OFAC\u2019s sanctions list. The court agreed, stating that OFAC\u2019s actions overstepped its legal bounds.<\/p>\n<p>\u201cTornado Cash, as defined by OFAC, does not own the services provided by the immutable smart contracts,\u201d Willett wrote. \u201cA homeowner may own the right to trash-removal services and a client may own the right to legal services performed by a lawyer, but neither the homeowner nor the client owns the person performing the trash-removal services or the lawyer\u2014for good reason. Similarly, Tornado Cash as an \u201centity\u201d does not own the immutable smart contracts, separate and apart from any rights or benefits of the services performed by the immutable smart contracts.\u201d<\/p>\n<p>Paul Grewal, Coinbase\u2019s chief legal officer, supported the ruling <a href=\"https:\/\/x.com\/iampaulgrewal\/status\/1861549058797772874\">in a post on X<\/a>, stating \u201cprivacy wins.\u201d <\/p>\n<p>\u201cNo one wants criminals to use crypto protocols, but blocking open source technology entirely because a small portion of users are bad actors is not what Congress authorized,\u201d Grewal wrote. <\/p>\n<p>Despite the legal victory, others involved in the development of Tornado Cash continue to face legal challenges. In May, Alexey Pertsev, a developer associated with the platform, was <a href=\"https:\/\/finance.yahoo.com\/news\/tornado-cash-developer-alexey-pertsev-113439000.html\">sentenced to over five years<\/a> in prison by Dutch authorities for money laundering activities exceeding $2 billion. Pertsev, however, plans to appeal the ruling.<\/p>\n<div class=\"ad ad--inline_1 \">\n<div class=\"ad__inner\"> <span class=\"screen-reader-text\">Advertisement<\/span> <\/div>\n<\/div>\n<p>The decision of the Fifth Circuit overturns a previous ruling by a federal judge in Texas that upheld the government\u2019s sanctions. The case will now return to federal court in Austin for additional proceedings. <\/p>\n<p>You can read the full ruling below. <\/p>\n<p> <\/body> <\/p>\n<footer class=\"single-article__footer\" readability=\"3.6469194312796\">\n<div class=\"author-card\" readability=\"14\">\n<div class=\"author-card__avatar\">\n<figure class=\"author-card__image-wrap\"> <img data-recalc-dims=\"1\" decoding=\"async\" class=\"author-card__image\" src=\"https:\/\/i0.wp.com\/ddi.mohflo.net\/wp-content\/uploads\/2024\/11\/appeals-court-tosses-sanctions-on-tornado-cash-crypto-mixer-1.jpg?w=640&ssl=1\" alt=\"Greg Otto\"> <\/figure>\n<\/p><\/div>\n<p><h4 class=\"author-card__name\">Written by Greg Otto<\/h4>\n<p> Greg Otto is Editor-in-Chief of CyberScoop, overseeing all editorial content for the website. Greg has led cybersecurity coverage that has won various awards, including accolades from the Society of Professional Journalists and the American Society of Business Publication Editors. Prior to joining Scoop News Group, Greg worked for the Washington Business Journal, U.S. News & World Report and WTOP Radio. 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{"id":6435,"date":"2024-11-27T10:51:59","date_gmt":"2024-11-27T16:51:59","guid":{"rendered":"https:\/\/cyberscoop.com\/?p=82746"},"modified":"2024-11-27T10:51:59","modified_gmt":"2024-11-27T16:51:59","slug":"appeals-court-tosses-sanctions-on-tornado-cash-crypto-mixer","status":"publish","type":"post","link":"https:\/\/ddi.mohflo.net\/index.php\/2024\/11\/27\/appeals-court-tosses-sanctions-on-tornado-cash-crypto-mixer\/","title":{"rendered":"Appeals court tosses sanctions on Tornado Cash crypto mixer"},"content":{"rendered":"