U.S. Court Shuts Down Treasury’s Attempt to Reblacklist Tornado Cash

A federal court in Texas has blocked the U.S. Treasury from ever reimposing sanctions on the crypto mixing service Tornado Cash, putting an end to a long-running legal saga.

Tornado Cash was first blacklisted by the Treasury’s Office of Foreign Assets Control (OFAC) in 2022, accused of facilitating the laundering of $7 billion in illicit funds, including for North Korea’s Lazarus Group.

The designation sparked legal battles, and last month, the service was officially removed from the sanctions list.

After its delisting, the Treasury argued that the case had become irrelevant and didn’t warrant a final decision — a move critics believed was an attempt to preserve the option to re-sanction Tornado Cash in the future. That strategy has now been shut down.

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In a ruling issued Monday, U.S. District Judge Robert Pitman dismissed the Treasury’s claim and warned that officials appeared ready to reinstate the same sanctions again.

He clarified that the removal of Tornado Cash from the list wasn’t simply a discretionary policy move, but a necessary step in response to legal orders.

As a result of the court’s decision, the Treasury is now permanently barred from enforcing its earlier sanctions on Tornado Cash, which the judge declared unlawful.

Alexander Stefanov