Tornado Cash Token Soars Following Court Ruling
By: Eva Baxter
The cryptocurrency world witnessed a significant development as the price of the Tornado Cash token (TORN) surged dramatically following a landmark judicial decision by a US federal appeals court. The court ruled that the US Treasury Department's sanctions against Tornado Cash’s immutable smart contracts were unlawful, leading to a rapid appreciation of TORN to a two-year high. Tornado Cash, an on-chain privacy tool allowing anonymous transactions through immutable smart contracts, was sanctioned in 2022 for allegedly facilitating the laundering of illicit funds.
The US Court of Appeals found that the Treasury overstepped its authority in sanctioning these smart contracts as they operate autonomously and do not conform to the legal definition of property or services under the International Emergency Economic Powers Act (IEEPA). The court's decision underscored the nature of open-source software and decentralized governance as crucial aspects, emphasizing that these contracts are not the property of any individual or foreign entity. A significant event, the "trusted setup ceremony" of 2020, further solidified their immutable status, where over 1,000 contributors helped finalize Tornado Cash’s cryptographic parameters, effectively handing governance to the community through the TORN token.
In response to the court's finding, TORN saw a significant increase in its value, skyrocketing by 400% within 24 hours, reaching a peak of $40 before stabilizing around $18. Despite this resurgence, TORN remains considerably below its February 2021 all-time high of $436. This judgement was celebrated across the crypto community, with advocates heralding it as a triumph for decentralized technologies and privacy rights. It casts a spotlight on the broader implications for similar privacy-focused cryptocurrencies, which have enjoyed gains following the ruling.
Prominent figures in the crypto space, such as Paul Grewal from Coinbase, highlighted this decision as a protective measure against unjust sanctions on open-source software. Grewal stressed the importance of combating illicit activities without overreaching legal boundaries. Consensys’ Bill Hughes echoed these sentiments, clarifying that while the ruling does safeguard certain aspects of Tornado Cash, it remains a specific issue concerning smart contracts devoid of administrative keys. This decision signifies a crucial precedent as legal interpretations around blockchain technologies continue to evolve, spotlighting the need for nuanced regulatory frameworks that accommodate the inherent characteristics of decentralized platforms.
