A US District Court has reversed sanctions against Tornado Cash, while developer Alexey Pertsev remains in custody on money laundering charges worth $1.2 billion.
After a careful look at previous sanctions against the Tornado Cash crypto mixing protocol, a US court has now decided to reverse the sanctions.
The US Treasury’s Office of Foreign Assets Control (OFAC) had sanctioned Tornado Cash in August 2022 after establishing links between the protocol and the North Korean Lazarus Group. At the time, OFAC alleged that the protocol facilitated the laundering of over $455 million in stolen digital assets for the group. This led to the arrest of Tornado Cash developer Alexey Pertsev, who was eventually found guilty of laundering $1.2 billion worth of ill-gotten assets through the platform by the s-Hertogenbosch Court of Appeal last May. The court’s verdict also included a five years and four months prison term for Pertsev.
🚨 BREAKING 🚨
🇺🇸 U.S Court lifted OFAC sanctions
on Tornado Cash. This is a Massive
win for privacy tokens.Crypto is winning, thanks to TRUMP. pic.twitter.com/lQjarWT98V
— Ash Crypto (@Ashcryptoreal) January 22, 2025
Hope Shines for Tornado Cash But Pertsev Remains in Custody
In a recent development, meanwhile, new court documents reveal that the US District Court for the Western District of Texas has now revisited the OFAC sanctions. The January 21 filing reads in part:
“It is ordered and adjudged that the judgment of the district court is reversed, and the cause is remanded to the district court for further proceedings in accordance with the opinion of this court.”
Notably, the recent development suggests that Tornado Cash may have something to cheer about. However, it doesn’t directly equate to a free pass for Pertsev, who is still being held on money laundering-related charges.
In March 2024, Pertsev put up a strong argument that he could not be held responsible for what users choose to do with its platform. However, the court countered, stating that Pertsev and other top executives of Tornado Cash could have put extra measures to guard against the wrong use of the protocol.
For now, observers will wait to see how Pertsev’s personal case unfolds.
OFAC Tagged Overzealous
In relation to this case, six Tornado Cash users have filed an appeal against OFAC, claiming that the agency may have overstepped its authority with these sanctions. In their November appeal, the plaintiffs argued that blockchain transactions are not untraceable, suggesting that the protocol’s developers could not have been the bad actors in this case.
Also, they said that OFAC does not have the “statutory authority” to blacklist Tornado Cash the way it did.
Initially, the Tornado Cash sanctions raised a reasonable amount of concerns among developers. Particularly, as it relates to privacy-focused technologies. However, with this recent overturn, a major shift toward more friendly regulations for privacy-focused technologies may be well underway.
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