Tornado Cash Secures Legal Victory as U.S. Drops Appeal

The U.S. government has formally withdrawn its appeal in the Coin Center lawsuit, effectively securing protection for Tornado Cash against renewed sanctions. This decision concludes a multi-year legal battle that began when the U.S. Treasury Department sanctioned the cryptocurrency mixing service in 2022, alleging that it facilitated illicit transactions by North Korean actors. The sanctions were lifted in November 2024, and the recent withdrawal of the appeal ensures that similar sanctions cannot be imposed under existing statutes.

Coin Center, a non-profit research and advocacy center focused on the public policy issues facing cryptocurrency, initiated legal action against the U.S. Treasury Department in 2022. The organization argued that the sanctions imposed on Tornado Cash were unjustified and violated the rights of users and developers. The recent withdrawal of the appeal by the U.S. government marks a significant victory for Coin Center and the broader cryptocurrency community.

Peter Van Valkenburgh, the Director of Research at Coin Center, confirmed the development via social media, noting that the government declined to defend its prior legal interpretation. This decision reflects a shift in the U.S. government's stance on cryptocurrency regulation and highlights the growing recognition of the importance of decentralized privacy protocols in the digital asset ecosystem.

Tornado Cash’s associated token, TORN, increased approximately 4% following the announcement. This price movement occurred despite lingering uncertainties about the platform’s future. Co-founder Roman Storm currently faces separate criminal charges by the U.S. Department of Justice. His trial preparations continue, with prosecutors restricting certain witness testimony. The resolution prevents renewed Treasury sanctions but doesn’t affect Storm’s pending criminal case.

Tornado Cash remains technically operational as decentralized software. However, its capacity to regain previous adoption levels remains uncertain. The resolution prevents renewed Treasury sanctions but doesn’t affect Storm’s pending criminal case. The platform allows for unlinkable ETH and ERC-20 withdrawals, which has made it a focal point of the privacy vs. regulation debate since 2022. The recent legal outcome may reopen developer interest and push further community governance initiatives, especially now that the threat of imminent regulatory action has softened.

Tornado Cash still holds over $468 million in total value locked (TVL) across its anonymization pools, underscoring the protocol’s ongoing relevance in on-chain privacy use cases. The renewed attention has driven trading activity primarily on HTX (formerly Huobi), which accounts for over 86% of 24-hour TORN volume. Other exchanges such as MEXC, Uniswap, and CoinEx also show healthy liquidity.