A US federal court has officially overturned its previous support for the Treasury’s sanctions on Tornado Cash. This has dealt a blow to the Office of Foreign Assets Control (OFAC) and given privacy advocates something to toast.
The ruling suggests that OFAC’s original sanctions violated the Administrative Procedure Act. The old legal framework basically implied that “follow the rules, even if you’re the government.” As of now, the OFAC is legally barred from reinstating its old sanctions and it cannot reimplement them unless they do it by the book.
Tornado Cash scores big win in court
Coinbase legal head, Paul Grewal in a X post, mentioned that the 5th Circuit court ruled against the government in November, but it has been repeatedly trying to avoid entry of a final judgment in the Tornado Cash case. The defendant in the case, the Department of the Treasury, had asked the court twice for long delays before claiming the case was moot, where no final judgment was needed.
It was done by the defendant as they had chosen to remove Tornado Cash from the Sanctions List in “their discretion.” Grewal highlighted that the court said no to this nonsense and OFAC is now legally prohibited from reinstating the original sanctions. He congratulated the plaintiffs and commended their courage to stand up to their own government for their rights under law.
After the 5th Cir. ruled against the government in November, it repeatedly tried to avoid entry of a final judgment in the Tornado Cash case. It asked the Court TWICE for long delays before claiming the case was moot (with no final judgment needed) b/c they had chosen to remove… pic.twitter.com/pSDsnWawo8
— paulgrewal.eth (@iampaulgrewal) April 28, 2025
Reacting to the major win, Tornado Cash (TORN) price increased by over 7% in the last 24 hours. TORN price has surged by 201% in the last year. It is trading at an average price of $7.93 with a trading volume of $132k. Meanwhile, it is still down by 98% from its all time of $437, recorded on Feb 13, 2021.
The global digital assets market remained calm on Tuesday morning as the Bitcoin price still hovers around the $94K-$95K zone. The cumulative crypto market stood at $2.98 trillion moving towards the much-anticipated $3 trillion mark.
What happened in the court?
Tornado Cash was sanctioned in 2022 for allegedly laundering crypto for North Korea’s Lazarus Group and now it got a breather. Documents mention that Plaintiffs moved for an entry of final judgment on February 3, 2025, where they requested the court to issue a revised final judgment. However, the Defendants indicated their intent to respond and filed on March 18, asking for additional time.
In a scathing order, the court said you can’t just hit the “moot” button and reset the board when you’re losing. The sanctions were meant to be fully litigated and so pausing the game and flipping the rules, that’s not how constitutional authority works. The court cited the US Supreme Court’s recent decision in FBI v. Fikre (2024) that a live case or controversy cannot be so easily disguised, and a federal court’s constitutional authority cannot be so readily manipulated.”
As a result, the court granted the Plaintiffs’ Motion for Summary Judgment under the Administrative Procedure Act and denied the government’s corresponding motion, vacated its earlier final judgment. However, it confirmed that it will issue a new final judgment setting aside the agency’s determination as unlawful.
Cryptopolitan Academy: Coming Soon - A New Way to Earn Passive Income with DeFi in 2025. Learn More
