- US court ruled in favor of Tornado Cash, a privacy-focused cryptocurrency mixer, overturning the US Treasury Department’s decision to sanction its smart contracts.
- The court’s decision emphasizes the distinction between immutable smart contracts and the entities using them, limiting government authority over decentralized technologies.
- Prominent figures in the crypto industry, including Vitalik Buterin, have rallied behind the affected developers, highlighting the community’s concern over the government’s actions.
Tornado Cash, a crypto mixing service, won a legal battle against the US Treasury Department. The DOJ earlier added the crypto mixer to its sanctions list under the International Emergency Economic Powers Act (IEEPA). However, the 5th Circuit Court of Appeals has ruled in favor of the plaintiffs, determining that these immutable smart contracts do not constitute “property” and therefore cannot be sanctioned under IEEPA.
The landmark decision effectively overturned the Treasury Department’s previous action and set a new precedent in the ongoing debate surrounding the regulation of cryptocurrency and blockchain technology. Tornado Cash, a popular privacy-focused cryptocurrency mixing service, has been at the center of this controversy.
The court’s decision emphasizes the distinction between the smart contracts themselves, which are lines of code operating autonomously, and the entities or individuals who may utilize them. By recognizing the immutability of these contracts, the court has effectively limited the government’s ability to sanction them under IEEPA.
Previously, the DOJ’s action against Tornado Cash has sparked significant controversy within the cryptocurrency community and among legal experts. Critics argue that the DOJ’s move demonstrates a lack of understanding of blockchain technologies, particularly the nature of immutable smart contract protocols.
Tornado Cash: Crypto Community Rallies Against DOJ Overreach
As reported by TronWeekly, many have taken critical note of the DOJ’s decision to levy serious charges, such as money laundering, against software developers who have not engaged directly with or solicited conduct from a sanctioned entity. They contend that this approach amounts to misapplication of the International Emergency Economic Powers Act [IEEPA].
In the wake of this event, prominent industry players rallied behind the affected developers. On Octobеr 5, Ethеrеum foundеr Vitаlik Butеrin donаted 100 Ethеrеum (ETH), worth аpproximаtеly $242,000, to Romаn Storm’s dеfеnsе fund. This contribution, follows Butеrin’s еаrliеr donаtion of ovеr $100,000 in Mаy, undеrscoring his commitmеnt to аiding thе Tornado Cash dеvеlopеrs аmid ongoing lеgаl chаllеngеs.
This legal victory is a significant milestone for the broader crypto industry. It also raises questions about the extent of government authority over decentralized systems. As the legal and regulatory landscape continues to evolve, it remains to be seen how this ruling will shape the future of cryptocurrency and blockchain technology.