The Surge of Tornado Cash’s TORN Token
Recently, Tornado Cash’s TORN token witnessed a remarkable surge in its price, reaching a two-year high. This spike came following a significant ruling by a US federal appeals court, declaring the sanctions imposed by the US Treasury Department on the platform as unlawful.
Understanding Tornado Cash
Tornado Cash is a decentralized on-chain privacy tool that leverages immutable smart contracts to facilitate anonymous cryptocurrency transactions. This platform gained attention when it was sanctioned in 2022 by the US Treasury’s Office of Foreign Assets Control (OFAC). The allegations suggested that Tornado Cash was involved in laundering over $7 billion in cryptocurrencies, including funds stolen by hacking groups associated with North Korea.
The Landmark Judgement
The US Court of Appeals made a critical decision on Nov. 26, stating that the Treasury had exceeded its authority by imposing sanctions on Tornado Cash’s immutable smart contracts. As these contracts are open-source and not owned by any individual or entity, they fall outside the scope of sanctions.
One pivotal event highlighted by the court was the “trusted setup ceremony” in 2020, where numerous participants contributed cryptographic data to finalize Tornado Cash’s parameters. This process solidified the immutability of the smart contracts, eliminating the possibility of updates or external control. Governance was subsequently transferred to the Tornado Cash community through the TORN token.
Celebration in the Crypto Community
The ruling was met with widespread celebration in the crypto community, heralded as a significant victory for decentralized technologies and privacy rights. Industry leaders praised the decision, emphasizing the protection of open-source software from unjust sanctions.
Paul Grewal, Coinbase’s Chief Legal Officer, highlighted the importance of addressing illicit activities without imposing blanket restrictions on decentralized protocols. Similarly, Bill Hughes, Consensys’ senior counsel, clarified that the judgment specifically pertained to smart contracts without administrative control.
