Court Ruling Shields Tornado Cash From OFAC
A ruling by a US federal court has permanently blocked the authorities from targeting a cryptocurrency privacy tool.
The Texas federal court on Tuesday permanently barred the US Treasury's Office of Foreign Assets Control (OFAC) from reimposing sanctions on Tornado Cash, a cryptocurrency mixing service that enhances transaction privacy by obscuring the origin of funds.
Judge Robert Pitman's ruling reinforces a November 2024 Fifth Circuit decision that determined immutable smart contracts, self-executing code that cannot be altered once deployed, are not sanctionable property under US law.
Read: Treasury Lifts Sanctions on Tornado Cash
"[OFAC does] not suggest they will not sanction Tornado Cash again, and they may seek to 'reenact precisely the same [designation] in the future'," Judge Pitman noted in his ruling, explaining why a permanent injunction was necessary despite OFAC's March 2025 voluntary delisting of the protocol.
This clarity could prove instrumental in attracting institutional investment to the US DeFi sector, a key goal of US President Donald Trump, who has expressed intentions to make America the "crypto capital of the planet.”
The court's ruling aligns with recent policy shifts from the Department of Justice, which announced earlier this month it would no longer pursue criminal charges against crypto mixing services unless directly involved in criminal activities.
This could have immediate implications for the Samourai Wallet case, where prosecutors and defense lawyers requested a 16-day extension on April 30 to evaluate dropping charges.
Samourai Wallet co-founders Keonne Rodriguez and William Hill were charged in April 2024 with conspiracy to commit money laundering and operating an unlicensed money transmitting business. The DOJ alleged the Bitcoin mixing service facilitated $2 billion in unlawful transactions and laundered $100 million from dark web markets like Silk Road and Hydra.
However, with the DOJ's new policy limiting investigations to cases involving direct victimisation (e.g., scams, hacks), the charges may soon be dropped, giving privacy advocates another win.
"After the 5th Circuit ruled against the government in November, it repeatedly tried to avoid entry of a final judgment. Today the Court said no to this nonsense," commented Paul Grewal, Coinbase Chief Legal Officer.
A letter to the Trump administration from the DeFi Education Fund, signed by 232 industry figures, had previously warned that prosecuting developers creates a legal environment that "does not just chill innovation, it freezes it."
More than 100 Ethereum addresses have been removed from the sanctions list, restoring access to users whose funds had effectively been frozen since 2022.
The decision marks one of the most significant legal victories for the cryptocurrency industry in recent years, establishing that decentralised, open-source protocols cannot be treated as sanctionable entities under current US law, a precedent that could reshape digital finance for years to come.