A U.S. district court has concluded that the Treasury Department’s sanctions on cryptocurrency mixer Tornado Cash are valid, denying a challenge to the legitimacy of the sanctions brought by six Tornado Cash users.

See related article: Privacy vs. security: an international debate on Tornado Cash

Fast facts

  • U.S. District Judge Robert Pitman concluded on Thursday that Tornado Cash can be properly sanctioned as an entity under the International Emergency Economic Powers Act. Pitman ruled that the smart contracts deployed by Tornado Cash count as “property” subject to sanctions under the Office of Foreign Assets Control’s regulatory definitions.
  • In May, six Tornado Cash users challenged the legitimacy of the sanctions against the company. They argued that the government-led sanctions violated users’ First Amendment rights to free speech. The court rejected the claim, finding no evidence the government’s actions had impacted their freedom of speech.
  • Coinbase Global’s chief legal officer Paul Grewal waded into the debate Friday. He wrote on X, formally Twitter, that the cryptocurrency exchange will continue to back the Tornado Cash plaintiffs’ arguments, despite the court’s decision against them.
  • The U.S. treasury department claims that cybercriminals use Tornado Cash to launder virtual currency, including to funnel illicit funds to the government of North Korea.

See related article: North Korean hackers move 41,000 ETH stolen from Harmony Bridge attack