Tornado Cash Sanctions: Crucial Court Battle Ends as Coin Center Appeal Dismissed
A significant legal battle over the US Treasury Department’s sanctions against the Tornado Cash mixing service has concluded. The appeal filed by crypto advocacy group Coin Center challenging these sanctions has been dismissed, bringing an end to this specific court challenge regarding the Tornado Cash sanctions. This development comes just days before one of the service’s developers faces criminal charges.
Understanding the Coin Center Lawsuit Against US Treasury Crypto Actions
In 2022, the US Treasury’s Office of Foreign Assets Control (OFAC) added several wallet addresses linked to Tornado Cash to its list of sanctioned entities. This action sparked immediate controversy and legal challenges from various parties.
Coin Center, a prominent crypto policy think tank, filed a Coin Center lawsuit arguing that the Treasury Department had overstepped its legal authority by sanctioning a decentralized technology rather than a specific person or entity. Their appeal aimed to challenge the fundamental basis of OFAC’s action against the mixing service.
Other legal challenges also emerged, including one supported by Coinbase on behalf of six individuals who had used Tornado Cash for legitimate privacy purposes and found their funds effectively frozen by the sanctions.
Why Did the Tornado Cash Sanctions Appeal End?
The US Court of Appeals for the Eleventh Circuit formally dismissed Coin Center’s appeal. This decision was part of a joint filing between Coin Center and the US Treasury crypto divisions involved in the case. The court granted a motion to vacate a lower court’s ruling and instructed that the case be dismissed.
According to Coin Center executive director Peter Van Valkenburgh, the government was not interested in continuing to defend its interpretation of sanctions laws in court. This suggests a potential shift or reluctance by the Treasury to pursue the legal defense of its broad authority in this specific context through this particular case.
This dismissal effectively concludes Coin Center’s direct legal challenge against OFAC’s statutory authority regarding the 2022 sanctions.
Navigating the Complex Landscape of Crypto Regulation
The dismissal of the Coin Center appeal is one piece in a larger puzzle surrounding crypto regulation and enforcement in the United States. While Coin Center’s specific challenge to the Treasury’s authority is over, other legal actions have seen different outcomes.
For example, in January, a US District Court in Texas ordered the repeal of OFAC sanctions against Tornado Cash in a separate case brought by users. Following this, the Treasury Department removed Tornado Cash from its Specially Designated Nationals list in March, arguing in court that the user case was moot because the designation had been removed.
These events highlight the evolving and sometimes contradictory nature of legal challenges and government responses concerning decentralized technologies and sanctions law.
What About the Roman Storm Trial and Developer Legal Issues?
Crucially, the end of Coin Center’s appeal does not resolve the significant legal troubles faced by individuals associated with Tornado Cash. The appellate court filing occurred shortly before Roman Storm, one of the service’s co-founders and developers, is scheduled to stand trial in New York federal court.
Roman Storm faces serious charges, including money laundering conspiracy, operating an unlicensed money transmitter, and conspiracy to violate US sanctions. It remains uncertain whether the dismissal of Coin Center’s appeal will have any bearing on the arguments or evidence presented in the upcoming Roman Storm trial.
Another developer, Alexey Pertsev, has already been convicted of money laundering in the Netherlands and received a prison sentence. The third developer named in the indictment with Storm, Roman Semenov, was reportedly still at large.
The legal actions against the developers are criminal proceedings brought by the Department of Justice, distinct from the civil challenges against the Treasury Department’s sanctions designation.
Conclusion: A Chapter Closes, But the Story Continues
The dismissal of the Coin Center appeal marks the formal end of one specific legal challenge against the US Treasury’s controversial Tornado Cash sanctions. Coin Center’s effort to contest the fundamental statutory authority used for the sanctions has concluded with the government apparently choosing not to defend its position further in this appellate court context.
However, this does not signify a complete end to legal issues surrounding Tornado Cash. The landscape of crypto regulation remains complex, with ongoing debates about how existing laws apply to decentralized protocols. More importantly, the developers behind the service continue to face severe criminal charges, underscoring the significant legal risks involved in creating and operating such technologies under current legal interpretations by enforcement agencies.
While the appeal is over, the broader implications for privacy tools, sanctions enforcement, and developer liability in the crypto space are far from settled.
