Tornado Cash vs. OFAC: A Landmark Legal Battle in Crypto

In a landmark case, the Fifth Circuit Court of Appeals in the United States has overturned a district court's decision regarding sanctions imposed on Tornado Cash, an open-source cryptocurrency transaction protocol, by the Office of Foreign Assets Control (OFAC). This episode delves into the arguments presented by six Tornado Cash users who contended that listing Tornado Cash as a blocked entity exceeded OFAC's legal authority, as the software code itself is not owned by any foreign entity. The appeals court ruled that Tornado Cash's immutable smart contracts do not qualify as "property" under legal definitions, thus falling outside OFAC's jurisdiction. We explore the implications of this decision, which emphasizes a literal interpretation of laws and rejects agency interpretation deference, instructing the district court to grant a partial motion for summary judgment. Join us to unpack this significant legal victory for the crypto community.