Texas Court Rules Tornado Cash Sanctions Invalid, Treasury Backtracks

A Texas district court has delivered a decisive blow to U.S. sanctions against Tornado Cash, forcing the Treasury Department to remove the crypto privacy tool from its blacklist. The ruling caps a two-year legal battle that questioned the limits of regulatory overreach in decentralized finance.

The Treasury’s OFAC had accused Tornado Cash of facilitating money laundering in 2022, targeting not just its creators but the Immutable smart contracts underpinning the service. This move sparked outrage among privacy advocates and set the stage for Monday’s judicial rebuke. "Code is speech" arguments gained traction as courts repeatedly found OFAC exceeded its statutory authority.

Though OFAC delisted Tornado Cash in March 2024, the agency disingenuously framed the reversal as a voluntary policy shift rather than court-mandated compliance. Plaintiffs—actual users of the mixing service—continue challenging this narrative, highlighting regulators’ reluctance to acknowledge judicial boundaries.