TLDR
Appeals court ends Tornado Cash case after Treasury drops sanctions in March 2025.
Coin Center’s challenge to OFAC’s authority formally dismissed by Eleventh Circuit.
Treasury cited “changed circumstances” in rescinding sanctions on crypto mixer.
Legal win for open-source protocols, but decentralized sanction rules remain murky.
A United States appeals court has officially brought the Tornado Cash lawsuit to a close after a joint motion to dismiss the case was granted. This decision follows the U.S. Treasury Department’s earlier removal of sanctions against the crypto mixing service. The court’s decision ends a legal dispute between nonprofit research group Coin Center and the government, centered on the authority used to sanction the platform.
The U.S. Court of Appeals for the Eleventh Circuit approved the joint motion last week, confirming that the case between Coin Center and the Treasury Department will not proceed. Coin Center had challenged the legal foundation of the sanctions, arguing that the designation was overly broad and not supported by existing law.
Background on the Tornado Cash Sanctions and Legal Dispute
In August 2022, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) sanctioned Tornado Cash. The action prevented individuals and businesses in the United States from interacting with the platform. OFAC claimed that the service had been used by criminal groups, including North Korean-linked hackers, to launder large amounts of digital assets.
Coin Center responded by filing a lawsuit, challenging the authority under which OFAC acted. The organization argued that sanctioning an open-source protocol violated free speech rights and misapplied financial laws. The legal fight continued for over a year, drawing attention across the crypto industry and among legal experts.
During the litigation, a federal court in Texas ruled that OFAC had exceeded its legal authority. Although the ruling applied to a separate case, it directly related to the issues raised by Coin Center.
Treasury Reverses Sanctions Before Final Ruling
In March 2025, the Treasury Department rescinded its sanctions on Tornado Cash. The government stated that changes in circumstances no longer supported the platform’s designation. Following this decision, the appeal process between the Treasury and Coin Center became unnecessary.
In the joint motion filed last week, the government noted, “OFAC’s rescission of the designation moots this appeal.” Coin Center, however, indicated that it believed the appeal would only be moot once the Texas court’s decision was final and unappealable.
Despite the slight difference in interpretation, both parties agreed to drop the case. The court granted their joint motion, officially closing the case.
Peter Van Valkenburgh, executive director at Coin Center, commented on the decision through a statement posted on X. He said, “This is the official end to our court battle over the statutory authority behind the TC sanctions. The government was not interested in moving forward and defending their dangerously overbroad interpretation of sanctions laws.”
Court Decision Ends One of Crypto’s Closely Watched Legal Battles
The appeals court’s action marks the end of one of the most high-profile legal challenges related to cryptocurrency and government sanctions. It also signals a shift in how U.S. regulators approach decentralized technologies and open-source platforms.
Tornado Cash, which operates through smart contracts on the Ethereum blockchain, had raised questions about whether non-custodial software could legally be targeted under existing sanctions frameworks. The lawsuit brought by Coin Center aimed to clarify these concerns and limit government overreach in the crypto sector.
Now that the sanctions are lifted and the court case dismissed, the matter is considered closed. The government has not indicated whether it plans to issue new guidance or rules for similar cases in the future.
Broader Impact on Crypto Regulation Still Uncertain
Although the Tornado Cash case has been dropped, the broader issue of how sanctions laws apply to decentralized tools remains unresolved. Regulators and lawmakers continue to debate the scope of current legal frameworks in relation to emerging blockchain technologies.
While Coin Center’s lawsuit has ended, the organization and other industry groups are likely to remain active in monitoring policy changes and legal actions that affect the crypto ecosystem. The decision to withdraw the sanctions has eased tensions but has not settled the broader questions facing the sector.
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