A court decision has brought Tornado Cash and its native token TORN, into the spotlight. The U.S. Fifth Circuit Court of Appeals deemed sanctions against the crypto mixer as unlawful.
It not only strengthened the privacy rights within the blockchain but also resulted in a 1,000% increase in the price of TORN.
For one smart money investor, this marked a huge payday: $455,000 invested grew to be an unrealized profit of $384,000. That is 540% in less than a month.
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Treasury’s Sanctions Overturned
Tornado Cash was sanctioned by the Treasury’s Office of Foreign Assets Control (OFAC) in July 2022 for helping launder more than $7 billion of stolen funds.
Out of these, the North Korean Lazarus Group, which is most famous for cybercrime, reportedly laundered millions through Tornado Cash.
But the court found that OFAC overstepped its legal authority on this matter. Pivotal to the FUD was the fact that Tornado Cash has a simple design for its smart contracts. These self-executing, decentralized computer programs written in lines of code located on the Ethereum blockchain do not have direct human control.
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The court then concluded that such contracts do not fit within the meaning of “property” under IEEPA because property cannot be owned, controlled or restrained.
“The immutable smart contracts at issue are not property because they are not capable of being owned,” the ruling clarified.
The decentralized design of Tornado Cash ensures that, even with sanctions in place, no entity—including North Korean hackers—can be entirely blocked from accessing the protocol.
Market Reaction: Tornado Cash Rally
The ruling’s immediate impact on the crypto market was profound. TORN’s price rocketed from $2.70 to over $30, delivering a stunning 1,000% increase. One investor, identified by blockchain intelligence platform, Lookonchain, seized the moment ahead of the ruling.
He accumulated 26,359 TORN tokens on Nov. 8 and Nov. 11 for $455,000 at an average price of $2.70. This strategic move now boasts unrealized profits of $384,000—a gain of 540%.
This dramatic rise distinguishes the current changes in market sentiment depending on legal and regulatory actions. The U.S. based online platform for cryptocurrency Coinbase had a significant part in the fight against the sanctions.
The company itself paid for the legal battle and claimed that the US government’s action of blacklisting a software as a terrorist fomenting tool is dangerous legal precedent when applied to open source software such as Tornado Cash.
The Chief Legal Officer of Coinbase, Paul Grewal, responded positively to the decision too. He pointed out that the sanctions had gone beyond the lawful boundaries of the Treasury, and called for the ruling as a triumph of decentralization and privacy.
Grewal said, calling the sanctions a case of government overreach,
“Tornado Cash smart contracts must now be removed from the sanctions list, and U.S. persons will once again be allowed to use this privacy-protecting protocol.”
What This Means for Blockchain Privacy
The given case demonstrates how the legal framework around decentralized technologies remains a legal minefield. It provides a longer lease of life to Tornado Cash.
It also begs questions that governments should ask about control over tools that are inherently unfeasible to contain.
In general, the crypto community has seen this as an essential win in decentralization and the constant struggle between creation and control.
