Tornado Cash freed from US sanctions after Texas court ruling

• US court blocks new sanctions against Tornado Cash
• Tornado Cash removed from US Treasury sanctions list
• Court ruling favors cryptocurrency mixer Tornado Cash

Cryptocurrency mixer Tornado Cash will not be eligible for inclusion on the sanctions list of the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC), according to a ruling by the U.S. District Court for the Western District of Texas on Monday.

The platform had been added to the list in 2022, under allegations of having facilitated the laundering of around US$7 billion, involving entities such as North Korea's Lazarus group. After years of legal disputes, Tornado Cash was removed from the sanctions list last month.

Despite the removal, the Treasury argued that the case had become “moot,” suggesting that the sanction could be reimposed at any time. However, the court rejected this argument, pointing out that there was evidence of an attempt to “‘re-enact precisely the same [designation]’ in the future.”

Judge Robert Pitman noted in his ruling: “Rather than acknowledging that the Fifth Circuit’s order required Tornado Cash to be removed from the list, defendants assert that they exercised their ‘discretionary power’ in deciding to do so based on more general legal and policy considerations.”

The ruling updates the amendments and determines that the Treasury is “permanently barred” from sanctioning Tornado Cash again based on the same grounds as before. The judge also classified the platform’s previous inclusion on the list as “illegal.”

This decision represents an important milestone for the cryptocurrency sector, reinforcing the limits on the actions of government agencies in relation to decentralized technologies.