US Court Blocks Tornado Cash Sanctions, Protecting Privacy

This ruling is being celebrated as a historic win for crypto users and anyone who values personal freedom.

Tornado Cash is a privacy-focused crypto protocol that lets users keep their transactions private.

Fifth Circuit Rules Tornado Cash Sanctions Unlawful, Defending Privacy

Last year, the U.S. Treasury sanctioned it, claiming it was being used by criminals. But many argued the sanctions went too far, targeting open-source technology instead of bad actors. The court agreed. It ruled that Tornado Cash’s smart contracts—pieces of code that operate automatically on the blockchain—aren’t “property.” These contracts are open-source and can’t be owned by anyone, so they can’t legally be sanctioned.

This ruling means U.S. citizens can once again use Tornado Cash without fear of breaking the law. Coinbase, a leading crypto company, helped challenge the sanctions and called the decision a victory for liberty. “No one wants criminals to misuse crypto,” Coinbase said, “but blocking open-source technology because a small group of users misuse it isn’t the answer.”

Privacy wins. Today the Fifth Circuit held that @USTreasury’s sanctions against Tornado Cash smart contracts are unlawful. This is a historic win for crypto and all who cares about defending liberty. @coinbase is proud to have helped lead this important challenge. 1/6

— paulgrewal.eth (@iampaulgrewal) November 26, 2024

Privacy advocates are over the moon about this decision. It sends a clear message: the government can’t overreach its authority to block technologies that protect privacy. This case shows that open-source tools like Tornado Cash are not the problem; bad actors are.

More About Tornado Cash & the U.S. Treasury

The court’s decision also reminds everyone that open-source protocols are a key part of innovation in crypto. Blocking them outright is like “throwing the baby out with the bathwater.” The CEO of Uniswap also talked about it:

holy shit

immutable smart contracts just beat the treasury department in court

“we hold that Tornado Cash’s immutable smart contracts (the lines of privacy-enabling software code) are not the “property” of a foreign national or entity, meaning (1) they cannot be blocked under… https://t.co/KROajcEGhq pic.twitter.com/qYpMa6vpe3

— Hayden Adams (@haydenzadams) November 27, 2024

The ruling forces the U.S. Treasury to remove Tornado Cash’s smart contracts from its sanctions list. It also sets a precedent for protecting privacy tools in the future.

For now, crypto users and developers alike can breathe a sigh of relief. The government’s overreach has been stopped in its tracks, and the decision reinforces the importance of defending liberty in the digital age.

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