Treasury Drops Tornado Cash Appeal Ending Sanctions Battle

The US Treasury has withdrawn its appeal against Tornado Cash, effectively ending a legal battle over economic sanctions imposed on the cryptocurrency mixing tool. This decision was filed with the Eleventh Circuit Court of Appeals, which subsequently vacated the judgment and instructed the lower court to dismiss the case entirely. The ruling signifies that the government’s guidance on enforcing these sanctions is no longer in effect, following an agreement between Coin Center and the Treasury to dismiss the case.

The Eleventh Circuit Court of Appeals had heard oral arguments on November 19 but never issued a ruling. Instead, both parties filed a joint motion to vacate the judgment, which was granted. This move indicates that the Treasury no longer wished to pursue the legal battle. Tornado Cash, a Russian-developed crypto mixer, is now no longer subject to the sanctions list.

Despite the resolution of the sanctions case, Roman Storm, a co-founder of Tornado Cash, still faces a criminal trial set to begin on July 14. Storm is accused of laundering over $1 billion, with some of the funds allegedly originating from the Lazarus Group, a North Korean hacking organization known for large-scale crypto heists. The Department of Justice has brought these charges against Storm and another developer, Roman Semenov.

Storm’s defense, supported by Coinbase and the Ethereum Foundation, argues that the government is targeting software code rather than specific actions. This defense has gained some traction in US courts, which have shown more openness to Storm’s arguments. A separate civil case has also been built around this same argument, adding further legal pressure on the government’s stance.

In a related development, Alexey Pertsev, another Tornado Cash developer, was convicted by a Dutch court in May 2024 for money laundering and sentenced to five years in prison. Pertsev had argued that the smart contracts on Tornado Cash run automatically and that he had no direct control over them. However, the judges rejected this reasoning and held him accountable for the actions facilitated by the software.