A Texas federal judge has dealt a blow to the US Treasury Department, permanently blocking them from re-imposing sanctions on the cryptocurrency mixer, Tornado Cash. This is a significant victory for cryptocurrency privacy advocates.
The Backstory: Sanctions and Legal Battles
In August 2022, the Treasury Department, through its Office of Foreign Assets Control (OFAC), sanctioned Tornado Cash, claiming it facilitated billions of dollars in illicit cryptocurrency transactions, including funds linked to North Korean hackers. This led to a legal challenge, and in January 2025, a court ruled that the Treasury Department had overstepped its authority.
Following this ruling, OFAC removed Tornado Cash from its sanctions list. However, the Treasury Department argued the case was now irrelevant (“moot”) because the sanctions were lifted. This didn’t sit well with many, including Coinbase’s Chief Legal Officer, Paul Grewal, who criticized the Treasury’s attempt to avoid a full legal reckoning.
The Judge’s Ruling: A Permanent Block
Judge Robert Pitman disagreed with the Treasury’s claim that the case was moot. He stated that the issue could easily happen again, and the Treasury’s actions were a way to avoid a proper legal judgment. The judge issued a permanent injunction, preventing the Treasury from re-sanctioning Tornado Cash. The court’s decision highlighted the Treasury’s attempt to circumvent the legal process by changing the facts on the ground rather than addressing the legal arguments.
The Broader Fight for Crypto Privacy
The ruling is a significant development in the ongoing debate surrounding cryptocurrency privacy and the regulation of decentralized technologies. While acknowledging the security and economic concerns, the judge focused on the immediate legal issue, leaving broader interpretations of the ruling to future cases.
This legal victory doesn’t end the fight for crypto privacy. Tornado Cash co-founder Roman Storm and developer Alexey Pertsev still face serious legal challenges. Pertsev is appealing a five-year sentence, while Storm awaits trial. Industry leaders are also calling on the White House to reconsider its approach to prosecuting open-source developers for how others use their code, arguing it stifles innovation.
