Tornado Cash Wins Legal Battle Against US Treasury, Developers Face Continued Legal Woes
Sanctions Lift Prohibited: Court Forbids U.S. Treasury from Re-imposing Tornado Cash Restrictions
In a significant victory for crypto privacy, a US Federal court has ruled that the Department of the Treasury is barred from reinstating its sanctions against privacy-focused crypto mixer Tornado Cash. This decision comes after the Treasury Department's attempt to claim the case was moot following the delisting of Tornado Cash from the Office of Foreign Assets Control's (OFAC) Specially Designated Nationals (SDN) list.
The court's ruling, made by Judge Robert Pitman of the US District Court for the Western District of Texas, was a major win for crypto privacy advocates. The court deemed the US Treasury's actions against Tornado Cash as "unlawful" and barred them from reimposing the same sanctions on the crypto mixer in the future.
The legal saga between Tornado Cash and the US Treasury Department began in August 2022 when OFAC sanctioned Tornado Cash for allegedly failing to impose effective controls preventing malicious actors from laundering crypto since 2019, including $455 million by North Korea's hacking group, Lazarus Group. However, the US District Court for the Western District of Texas reversed the OFAC sanctions against Tornado Cash in January 2025 following a November 2024 court ruling that determined the US Treasury had exceeded its authority by sanctioning the platform.
Despite being delisted from the SDN list, the US Treasury faced criticism for claiming that a final court ruling on the lawsuit was moot after delisting the protocol from the sanctions list. Coinbase's general counsel, Paul Grewal, criticized the Treasury Department's actions, arguing that it had not assured that it wouldn't relist the crypto mixer in the future.
In the amended final judgment, the court ruled that the case was not moot because the issue was capable of repetition while evading review, noting that the US Treasury sought to moot the case by changing relevant facts through additional agency action instead of simply filing a responsive brief about the entry of a final judgment effectuating the Fifth Circuit's mandate.
As a result of the court's judgment, Tornado Cash has been granted a summary judgment, and the court ordered that the US Treasury's designation is unlawful and set aside, and that the US Treasury is permanently enjoined from enforcing it.
Tornado Cash Developers Remain in Legal Hot Water
While Tornado Cash has managed to overcome the US Treasury's attempt to sanction them, the legal battle for its developers, Roman Storm and Alexey Pertsev, continues. Pertsev, who was found guilty of money laundering in a Dutch court, is appealing his five-year sentence, while Storm awaits his trial in July. Notably, Storm faces up to 45 years in prison if found guilty.
The DeFi Education Fund recently sent a letter to US President Donald Trump's Crypto Czar, David Sacks, urging the White House to end the Department of Justice's war on open-source developers. In the letter, the industry leaders argued that trying to hold software developers criminally liable for how third parties use their code would set a terrible precedent and freeze technological innovation in the US, going against Trump's promise to make America "the crypto capital of the planet."
As the legal battle for Tornado Cash and its developers continues, it highlights the delicate balance between regulating crypto and preserving privacy, innovation, and free speech in the burgeoning industry.
Enrichment Data:
- The legal battle between Tornado Cash and the US Treasury Department has seen significant developments, with the court rulings reversing the initial sanctions imposed by OFAC in November 2024 and further barring the Treasury from reinstating the same sanctions in April 2025.
- Despite the legal victories for Tornado Cash, its developers continue to face legal challenges related to money laundering allegations. Co-founder Roman Storm is charged with money laundering and faces a trial in July 2025, while another co-founder, Roman Semenov, remains at large and is wanted by US authorities. Developer Alexey Pertsev was found guilty of money laundering in a Dutch court and is appealing his sentence.
- The DeFi Education Fund has urged the White House to end the Department of Justice's war on open-source developers, arguing that the practice would set a terrible precedent and hinder innovation in the crypto industry.
- The court, presided over by Judge Robert Pitman, has barred the US Treasury from reinstating sanctions against Tornado Cash in 2024, making it clear that their actions against the crypto mixer were unlawful.
- Despite Tornado Cash's victory in avoiding future sanctions, its developers, such as Roman Storm and Alexey Pertsev, are still embroiled in legal issues, with Storm awaiting trial in July and Pertsev appealing his five-year money laundering sentence in a Dutch court.
- The DeFi Education Fund has appealed to the White House, urging an end to the Department of Justice's persistent legal action against open-source developers in 2025, arguing that it could stifle technological innovation and run counter to President Donald Trump's vision of making the US the leading authority in the crypto industry.
