US Government Backs Down: Drops Tornado Cash Appeal in Stunning Reversal

The feds just folded their hand against crypto's favorite privacy tool—was it regulatory fatigue or a quiet nod to decentralization's inevitability?

A Legal Retreat With Ripple Effects

No appeals. No last-minute motions. Just a straight-up withdrawal from challenging Tornado Cash's legal status—an unexpected win for privacy advocates.

Why This Matters

The DOJ's surrender hints at shifting tides: even bureaucrats now recognize that chasing code is like arresting water for being wet. Meanwhile, Wall Street still can't decide if crypto is a threat or the next revenue stream to milk dry.

Coin Center and federal authorities jointly filed for dismissal of their appeal before the Eleventh Circuit Court, which was pending a decision. The Eleventh Circuit granted the motion today, vacating the previous judgment and ordering the case’s dismissal. As a result of the government’s decision, Tornado Cash’s sanctions guidance will no longer be enforced, and the lawsuit is fully dropped, according to a Bloomberg report.

Tornado Cash has long been accused of helping the Lazarus Group, a North Korean hacking entity. The group was reported to be behind a $1.4 billion high-profile theft that hit cryptocurrency exchange Bybit some time ago. However, the current administration has maintained its commitment to combating similar money laundering campaigns. As a result of that changed mission, and a new crypto-friendly US administration, Tornado Cash appears to be getting a second chance.

In addition, Tornado Cash developer Alexey Pertsev was released from jail earlier this year. Pertsev is in the process of appealing his $1 billion money laundering conviction related to Tornado Cash. He received a five-year prison sentence from a Dutch court last May for money laundering in connection with Tornado Cash.