By AML Intelligence Correspondents
THE U.S. Treasury Department’s powerful OFAC agency acted outside its authority when it sanctioned cryptocurrency mixer Tornado Cash in 2022, an appeal court ruled today (Wed).
The Office of Foreign Assets Control (OFAC) had accused Tornado Cash of helping launder over $7 billion for North Korean hackers and other malicious cyber actors, a U.S. appeals court ruled.
A three-judge panel of the New Orleans-based 5th U.S. Circuit Court of Appeals sided with six users of Tornado Cash who with the financial backing of the cryptocurrency exchange Coinbase filed a lawsuit challenging the sanctions.
Cryptocurrency mixers are anonymized software tools that allow users to conceal the source or owner of digital assets. The sanctions had been imposed by the Treasury Department’s OFAC pursuant to the International Emergency Economic Powers Act.
OFAC blacklisted Tornado Cash after concluding it was helping launder proceeds of cyber crimes, including more than $455 million stolen by the Lazarus Group, a North Korean government-backed hacking group.
Writing for a panel comprised of conservative judges, U.S. Circuit Judge Don Willett said federal law only gave OFAC the authority to regulate property, which Tornado Cash’s immutable crypto-mixing smart contracts did not constitute.
Such self-executing smart contracts, or “mixers,” provided increased anonymity by collecting, pooling and shuffling…
