- The U.S. Treasury and Coin Center have dropped their appeals over the Tornado Cash sanctions
- A prior court ruling found the Treasury’s Office of Foreign Assets Control had overstepped by sanctioning immutable smart contracts
- Sanctions have been lifted, but criminal charges against Tornado Cash developers remain pending
A significant legal battle over the future of crypto privacy has ended with both the U.S. Treasury Department and Coin Center abandoning their appeals related to Tornado Cash. The decision comes after a federal court ruled that the Treasury’s Office of Foreign Assets Control (OFAC) had exceeded its authority when it sanctioned the Ethereum-based mixing protocol in 2022, a ruling that forced OFAC to delist Tornado Cash from its sanctions list earlier this year. This rendered the appeals moot, although criminal charges are still being pursued in the case of two co-founders.
Court Ruling Curtailed OFAC Power
Two separate appeals emerged from the legal battles over the U.S. government’s sanctioning of Tornado Cash, one led by Coin Center and the other by the Treasury Department itself. Coin Center, a Washington-based crypto policy advocacy group, filed its lawsuit in October 2023 in the Northern District of Florida.
The group argued that OFAC had exceeded its statutory authority by sanctioning Tornado Cash, which it described not as an organization or property, but as a set of autonomous, immutable smart contracts. Coin Center also asserted that the sanctions violated the First Amendment, claiming that U.S. citizens had a constitutional right to use privacy tools for lawful financial transactions.
In a pivotal November 2024 decision, the Fifth Circuit Court of Appeals found that OFAC had unlawfully sanctioned Tornado Cash’s immutable smart contracts, holding that because the code was not controlled or owned by any party, it could not legally be considered “property” under existing U.S. sanctions law. This undermined the central premise of the Treasury’s move, which had linked the protocol to over $1 billion in alleged illicit activity, including funds traced to North Korean hacking groups.
This defeat led to OFAC filing an appeal, maintaining that sanctioning such protocols was necessary for national security, particularly given Tornado Cash’s role in laundering funds for North Korean hackers and other criminal actors.
SDN List Removal Renders Appeals Moot
Following the appeal court’s decision, OFAC formally removed Tornado Cash from its Specially Designated Nationals list in March 2025; with no legal grounds left to contest, both the government and Coin Center voluntarily withdrew their appeals. The Eleventh Circuit dismissed the case on July 3, which is only now coming to light. Although the civil case is now closed, Coin Center made it clear the larger fight isn’t over. “We remain committed to defending civil liberties in digital spaces,” the group stated, noting it will continue to oppose overbroad interpretations of federal law.
While the sanctions have been nullified, the U.S. Department of Justice is still pursuing criminal charges against Tornado Cash co-founders Roman Storm and Roman Semenov. Storm faces trial in New York later this month for conspiracy to commit money laundering and sanctions violations. The case signals that, even as courts limit regulatory overreach, developers of privacy tools remain vulnerable to criminal prosecution.
