Months after coming in and out of courtrooms, Roman Storm, the co-founder of Tornado Cash, told a federal judge in the US that his criminal charges should be dropped. This is after an appeals court said that the platform’s smart contracts should not have been punished.
Roman Storm said that the Treasury’s Office of Foreign Assets Control (OFAC) went beyond its authority when it sanctioned Tornado Cash’s smart contracts.
He also added that the court’s decision “clearly affects” his charge of conspiring to break the International Emergency Economic Powers Act (IEEPA), which is a key law in the US sanctions system.
He explained that the appeals court said that smart contracts “are not the ‘property’ of a foreign national or entity,” which means that the law “cannot block” them.
The court’s decision about smart contracts helped the 700% rise in TORN.
Monero and other privacy coins have been pumping after the courts ruled that the US treasury overstepped by sanctioning tornado cash
and also because Europe is proposing to tax unrealized capital gains on bitcoin pic.twitter.com/yM3uTBVstD
— Crypto Tea (@CryptoTea_) December 4, 2024
The court’s ruling has also had a rollover effect on other decentralized platforms, especially privacy tokens, which have gone on a bullish rally since.
The Tornado Cash case
For months, six plaintiffs have argued this issue in relation to Tornado Cash’s punishment by the US Treasury Department.
The plaintiffs in this civil case advanced a similar argument to Alexey Pertsev, a co-founder of Tornado Cash, who was sentenced to a five-year prison term in May by a Dutch court. The sentencing came after being convicted of aiding in the laundering of $1.2 billion in illicit funds on the platform.
According to the fifth court, the Treasury Department was wrong in sanctioning the crypto mixer for executing transactions by North Korean-linked hackers and other national security threats and offenders.
The Fifth Circuit stated that Tornado Cash’s smart contracts cannot be altered or eliminated. They can, however, be used by any individual, including sanctioned North Korean hackers, and their creators would be unable to prevent their use.
Therefore, the court ruled that the Treasury’s Office of Foreign Assets Control, or OFAC, erred in sanctioning the enterprise in 2022. The high court directed a lower court to grant the plaintiffs’ motion to dismiss the penalties in part.
Roman Storm asserted in his motion that the district court was unable to determine whether Tornado Cash was irreversible when it denied his motion to dismiss in September.
However, the appeals court opinion “decided as a matter of law” that it was.
Storm is also accused of conspiring to operate an unregistered money-transmitting business and of participating in a money laundering conspiracy. He stated that it should be eliminated.
He submitted that Tornado Cash is not a financial institution; therefore, there could be no agreement to commit money laundering. This is because the Tornado Cash protocol became immutable in May 2020, four months before the alleged start of the conspiracy.
Tornado Cash users celebrate win for crypto privacy.
Crypto privacy supporters claimed the judgment reaffirmed their long-held belief that automated smart contracts should be regarded differently. They asserted that crypto privacy is different from that of other developers, such as DAOs or any other entity running an anonymizing platform like Tornado Cash.
Paul Grewal, Coinbase’s chief legal officer, has supported Roman’s stance for some time. He explained that the integrity of smart contracts, which are the backbone of the Ethereum ecosystem, is in jeopardy if the US Treasury succeeds in restricting different types of blockchain technology.
Paul Grewal described the ruling as a game-changer for blockchain technology. He wrote on X, “These 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.”
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
In addition, Coinbase CEO Brian Armstrong said, “If these sanctions stand, the damage will extend beyond these six individuals, and even beyond Tornado Cash.” He added, “Even though we’re not the ones facing the brunt of these damages, we couldn’t stand by.”
Now, a US court has agreed to deliver an eye-opening legal victory to the crypto industry.
The price of Tornado cash has been on a bull rally the whole year. However, the price has declined from $19 on 12 Dec to $9 now.
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