Texas Judge Blocks Future Sanctions on Tornado Cash

A Texas court issued a ruling on Tornado Cash, a cryptocurrency mixer previously sanctioned in 2022. The U.S. Treasury attempted to argue the removal was discretionary, ultimately leading to the court’s permanent injunction. Judge Robert Pitman affirmed the limitation on the Treasury’s actions, emphasizing Tornado Cash’s intrinsic operation within the decentralized cryptocurrency ecosystem. The court decision highlighted the significance of codes being neutral instruments.

“Rather than acknowledge that the Fifth Circuit’s order required delisting Tornado Cash, Defendants state that they exercised their ‘discretion’ in deciding to do so based on more general policy and legal considerations.” – Judge Robert Pitman

This decision limits government reach over blockchain privacy tools, potentially defending other decentralized protocols. Coinbase’s Chief Legal Officer saw this as a positive development, reinforcing the autonomy of cryptocurrency technologies.

Legal barriers removed, decentralized tools gain permanent relief from sanctions. This is expected to influence future U.S. regulatory approaches, offering stronger legal protection for privacy-focused cryptocurrency protocols.

In August 2022, Tornado Cash experienced unprecedented sanctions, setting regulatory standards. This court ruling now provides a precedent against future sanctioning of open-source code and other decentralized applications. Experts suggest that this ruling could stabilize the operational environment for cryptocurrency privacy tools, deterring future regulatory overreach. This shifts how legal frameworks view decentralized technologies within the industry.