Fifth Circuit Overturns OFAC Sanctions on Tornado Cash, Aiding Coinbase and Roman Storm

Nov 26, 2024, 11:44 PM

The U.S. Court of Appeals for the Fifth Circuit has ruled that the U.S. Department of the Treasury, specifically the Office of Foreign Assets Control (OFAC), overstepped its authority by sanctioning Tornado Cash's immutable smart contracts. The court found that these smart contracts, which enable privacy in cryptocurrency transactions, are not considered 'property' of a foreign national or entity, thus falling outside the scope of sanctions under the International Emergency Economic Powers Act (IEEPA). This decision marks a significant legal victory for the cryptocurrency industry, with Coinbase playing a key role in challenging the sanctions. The ruling also has implications for ongoing legal challenges, including the case involving Roman Storm, where the debate centers on whether the court can criminally charge developers for creating privacy software.