A federal court has ruled that Tornado Cash is now officially protected from U.S. sanctions.
This decision comes after the Treasury Department's Office of Foreign Asset Control (OFAC) removed Tornado Cash from its sanctions list in March, following an appeals court ruling that OFAC had overstepped its authority by sanctioning the service's smart contracts in 2022. However, the way in which OFAC delisted Tornado Cash had left room for potential future sanctions, prompting a group of plaintiffs to argue that the issue was not moot.
The plaintiffs, all users of Tornado Cash, accused OFAC of attempting to evade an adverse judgment. U.S.
District Judge Robert Pitman of the Western District of Texas has now ruled in favor of the plaintiffs, stating that OFAC's designation of Tornado Cash was unlawful and that the agency is permanently barred from enforcing sanctions against it. Meanwhile, the U.S.
Department of Justice is pursuing criminal charges against two Tornado Cash developers, and a recent memo from the Deputy Attorney General has led to a reevaluation of crypto-related enforcement priorities, potentially impacting ongoing cases.