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Many in the crypto industry are still reeling from an appellate court decision that the United States Department of the Treasury’s Office of Foreign Assets Control (OFAC) overstepped in sanctioning certain smart contracts associated with the cryptocurrency mixer Tornado Cash.&nbsp;
On Nov. 26, the US Court of Appeals for the Fifth Circuit <a data-ct-non-breakable="null" href="https://cointelegraph.com/news/tornado-cash-smart-contracts-cant-sanctioned-appeals-court" rel="null" target="null" text="null" title="null">ruled that OFAC</a> “exceeded its statutory authority” when it sanctioned some of Tornado Cash’s immutable smart contracts in 2022. 
Though the ruling did not close the door on the Treasury Department’s case, the six plaintiffs backed by Coinbase may see policy changes in 2025 impacting how the courts handle addresses associated with crypto mixers.
Bill Hughes, Consensys’ senior counsel and director of global regulatory matters, told Cointelegraph that OFAC still has a “lot of authority” to sanction entities connected to Tornado Cash. The Nov. 26 judgment will likely see the case sent down to lower courts, where lawyers can refile motions for summary judgment, a process that could “take months.” 
With a new presidential administration under Donald Trump expected in 2025, the Treasury may adapt its sanctions regime to align with the court decision or continue to fight the matter on appeal.
“I actually think under a Trump administration, it’s more likely that this opinion will be adopted as Treasury policy,” said Hughes, adding that it was still unlikely the Treasury would change Tornado Cash’s sanctions status before Trump takes office.
“It is to be seen how hawkish the Trump administration is on these national security issues as they relate to crypto,” said Hughes. “I could see the Treasury under a Trump administration basically adopting the court’s analysis of immutable smart contracts.”<iframe width="100%" height="315" src="https://www.youtube.com/embed/RealMH3VWWg" frameborder="0" allow="accelerometer; autoplay; encrypted-media; gyroscope; picture-in-picture" allowfullscreen></iframe>
Trump said in 2018 that he and North Korean leader Kim Jong Un “fell in love” after an in-person meeting and exchanging letters. He did not discuss how he might handle sanctions involving the reclusive nation during his 2024 presidential campaign.
Related: <a data-ct-non-breakable="null" href="https://cointelegraph.com/news/tornado-cash-resurgence-despite-ongoing-sanctions" rel="null" target="null" text="null" title="https://cointelegraph.com/news/tornado-cash-resurgence-despite-ongoing-sanctions">Tornado Cash sees $1.9B resurgence this year despite sanctions</a>
Under President Joe Biden, OFAC added 44 Tornado Cash smart contract addresses to its list of Specially Designated Nationals in August 2022. The department alleged that individuals had used the mixer to launder more than $7 billion worth of crypto, including funds stolen by the North Korea-affiliated Lazarus Group. 
Trump will bring new leadership to the Treasury and other government departments in January. On Nov. 22, the president-elect said he <a data-ct-non-breakable="null" href="https://cointelegraph.com/news/trump-leading-treasury-secretary-pick-pro-crypto" rel="null" target="null" text="null" title="https://cointelegraph.com/news/trump-leading-treasury-secretary-pick-pro-crypto">intended to nominate Scott Bessent</a>, one of his donors and financial advisers, as his Treasury secretary. 
In addition to the Fifth Circuit case, cryptocurrency advocacy group Coin Center <a data-ct-non-breakable="null" href="https://cointelegraph.com/news/coin-center-files-lawsuit-against-us-treasury-over-tornado-cash-sanctions" rel="null" target="null" text="null" title="null">filed a lawsuit</a> against the Treasury over Tornado Cash in 2022. There are parallels between the two cases, with lawyers for the respective parties arguing that the mixer itself or a related smart contract was not subject to sanctions.
<h2 id="prosecution-of-tornado-cash-developers">Prosecution of Tornado Cash developers</h2>
In 2023, US authorities with the Justice Department <a data-ct-non-breakable="null" href="https://cointelegraph.com/news/tornado-cash-co-founders-charged-with-money-laundering-sanctions-violations-ofac" rel="null" target="null" text="null" title="null">announced charges against Tornado Cash co-founders</a> Roman Storm and Roman Semenov. Storm was arrested and is scheduled to go to trial in April 2025 after Trump takes office, while Semenov was on the FBI’s most wanted list at the time of publication.
“If I had to bet, I think the prosecution [of Storm] is going to go forward,” said Hughes. “They’re going to have the trial, and he’s either acquitted, or there’s going to be calls from the crypto community for President Trump to commute his sentence or pardon him outright.”
Authorities in the Netherlands sentenced the third Tornado Cash co-founder, Alexey Pertsev, to more than five years in prison for money laundering. He <a data-ct-non-breakable="null" href="https://cointelegraph.com/news/court-prolongs-tornado-cash-developer-pertsev-pre-trial-detention" rel="null" target="null" text="null" title="null">remains in custody</a> as his lawyers prepare to appeal the conviction and sentence.
Magazine: <a data-ct-non-breakable="null" href="https://cointelegraph.com/magazine/tornado-cash-2-0-the-race-to-build-safe-and-legal-coin-mixers/" rel="null" target="null" text="null" title="null">Tornado Cash 2.0: The race to build safe and legal coin mixers</a>

US Treasury under Trump could take a different approach to Tornado Cash

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Cointelegraph

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