The U.S. Court of Appeals for the Fifth Circuit has ruled against the Treasury’s findings that privacy tools such as Tornado Cash are proprietary.

The court rejected one of the main charges of the Office of Foreign Assets Control (OFAC) of the US Department of the Treasury and recognized that the Tornado Cash cryptomixing service is not the private property of the developers. Immutable smart contracts deployed on the Ethereum blockchain do not meet the legal definition of property as they are accessible to anyone and cannot be owned, controlled, restricted or modified.

The appeals court ruled that OFAC did not have the necessary tools and grounds to ban the technology underlying Tornado Cash and designate the platform as a sanctioned entity.

“Tornado Cash’s immutable smart contracts, lines of privacy-protecting software code, are not the property of any foreign citizen or entity. Therefore, they cannot be blocked under the International Emergency Economic Powers Act, and the Treasury’s Office of Foreign Assets Control has exceeded its congressionally mandated authority. On this basis, sanctions against Tornado Cash, a service that anonymizes cryptocurrency transactions, should be lifted,” the resolution says.

Let us remind you that in 2022 the US Treasury Department introduced sanctions against Tornado Cash. According to the regulator, the platform has become a key tool for illicit actors, including the North Korean hacker group Lazarus, to launder stolen funds.