The United States’ Appeals Court has canceled the Treasury sanctions on the criticism of the controversial encryption mixer, which is a major victory for the Blockchain sector.
The Court of Appeal in the Fifth Department reviewed the case in 2022 and concluded that the government exceeded its regulatory powers when the Office of Foreign Assets Control (OFAC) banned all assets and property within the United States, which was associated with this encryption protocol and issued a ban on third parties to engage in a deal with the battery.
The Treasury claimed that Tornado Cash enabled criminal groups such as the famous Lazaros group group by washing approximately $ 500 million by serving them, while also allowing other criminal organizations to wash up to $ 7 billion.
“Despite the general assurances other than this, Tornado Cash has repeatedly failed to impose effective controls designed to prevent her from laundering money for malicious cyber actors regularly and without basic measures to face their risks.
The court claims that the government has exceeded its authority in this
At the heart of the court ruling was an explanation for the law, which could significantly challenge the government’s approach to organizing cryptocurrencies.
The Judge of the Department, Don Willet, who is written in the Three Judges Committee, explained a decisive distinction with profound effects on the encryption industry: Smart contracts cannot be classified as “ownership” subject to penalties.
The committee was explicit when he stated that the coding that enabled Tornado Cash to provide its encryption services was not a feature under the control of a foreign entity. They emphasized that the government “exceeded” the authority of Congress in this case.
Also read: Russia is pushing the encrypted currencies to circumvent the sanctions
Judge Willit admitted the concerns raised by the Ministry of Treasury in terms of how to use the protocol by criminals to wash revenue from their activities and the path of the money pass to avoid the authorities.
However, he stressed that the US Congress, not a legal court, should be the institution responsible for updating the law, which is due to the Carter Administration in 1977, to “target modern technologies such as encryption programs.”
Execs Crypto Celebration with the victory of Tornado Cash
Industry observers and executives for encryption celebrated the rule as it won a victory for the Blockchain sector and defended its basic principles, which include not somewhat identified.
Coinbase, the chief legal official of Coinbase, Paul Gharwal, described it as “a historic victory for encryption and all who are interested in defending freedom.”
“Preventing the completely open source technology because a small part of users are bad actors, not the authorization of Congress,” Grewal confirmed.
Privacy wins. Today the fifth circle holds that ATSHESURYPenalties against Tornado Cash Smart contracts illegal. This is a historic victory for encryption and all who are interested in defending freedom. Coinbase It is proud to help this important challenge. 1/6
– Paulgrewal.eth (iampaulgrewal) November 26, 2024
He stressed that the court’s decision pushes the government in its attempt to regulate the sector through enforcement instead of working with Congress to age or amend the current laws that take into account the unique dynamics brought by the Blockchain technology to the table in the financial field.
Meanwhile, Hayden Adams, founder of Excentalized Exchange Uniswap, also expressed his raising, claiming that “unchangeable smart contracts overcome the Treasury in the court.”
His statements reflect the broader opinion of the encryption sector that the government’s attempts to interfere in the sector were all harmful to its growth and progress.
The encryption mixers may be immoral, but OFAC cannot be punished
This victory in court does not make encryption mixers less controversial. These protocols allow individuals and organizations all over the world to quickly implement thousands of transactions to hide their identities and hide the money course.
While these services can be used to protect legitimate privacy, they have also been exploited by criminal entities in order to launder money and evade penalties.
It should be noted that the court ruling does not exempt the individuals involved in the establishment of the protocol from their criminal responsibility. The founders of Tornado Cash, Roman Storm and Roman Semenov are still facing separate indictment regulations for alleged money laundering activities.
Also read: The infiltrators stole $ 20 million in encryption from the United States government
In addition, one of the platform developers, Alexey Pertsev, was sentenced to more than five years in prison in the Netherlands for money laundering as well.
Although the intended purpose of the encryption mixer remains morally doubtful, what the court ruling has supported is that the hurricane criticism cannot be considered a property because it is a smart contract – which is, in essence, with a set of code.
The government has no legal basis to impose penalties for the law. Thus, it exceeded the authorization of Congress with its ban 2022.
It rises torn by more than 600 % after a short period of court ruling
The market immediately responded to the ruling. The original symbol of Tornado Cash witnessed an amazing increase of more than 400 %, jumping from $ 3.60 to about 27 dollars per symbol shortly after news appears.
This rise in the volatility of the distinctive symbol reflects the great effect of the court’s ruling on the protocol.
Moreover, the court’s decision to cancel the Offac sanctions on Cash Cash sets an important precedent that would prevent the government from taking similar measures against other Blockchain initiatives.
The federal government has so far adopted a simplistic approach to the organization of Web3 technologies. The industry expects this to change now that President -elect Donald Trump, a voice supporter of the encryption space during his campaign, will push Congress to take measures to update old laws that briefly to regulate the sector sufficiently.
