Well, here’s a bit of news that feels like a sigh of relief for some folks in the crypto world. A judge down in Texas, a fellow named Robert Pitman, just put his foot down. He ruled that Tornado Cash, that crypto mixing service (think of it like a digital blender for cryptocurrency, making it harder to track where money goes), cannot be sanctioned again by the U.S. government. Not ever again, according to this ruling anyway. It’s a pretty big deal.
- A Texas judge ruled that the U.S. government cannot sanction Tornado Cash again, a significant win for some in the crypto world. This decision reverses previous sanctions imposed by the Treasury Department’s OFAC.
- The DOJ is shifting its focus on crypto cases, narrowing its priorities to focus on more serious offenses and potentially dropping cases against crypto exchanges and mixing services for accidental rule breaking. This shift is causing lawyers to re-evaluate ongoing cases.
- Despite the ruling against sanctions on Tornado Cash, the legal battles for individuals involved, such as developers Roman Storm and Roman Semenov, continue, highlighting the complex and ongoing legal landscape surrounding crypto. A letter was also sent to President Trump to step in and stop the “lawless campaign” by the current DOJ.
See, the Treasury Department’s money-police arm, the Office of Foreign Asset Control (OFAC), had actually taken Tornado Cash off its naughty list back in March. This happened after an appeals court said OFAC went too far in 2022 when it sanctioned the code itself, the smart contracts (those are like self-executing digital agreements) that make Tornado Cash work. The appeals court basically said OFAC didn’t have the power from Congress to do that.
But here’s where it gets a little twisty. The way OFAC removed the sanctions, and the legal papers they filed afterwards, seemed to leave a door open. A little crack, you know? Like they might try to put Tornado Cash back on the list later. OFAC’s lawyers told the court that because they lifted the sanctions *before* the district court made its final decision (but *after* the appeals court ruling), the whole argument was pointless now. Moot, they called it. Like discussing whether dinosaurs liked pizza.
The people who sued OFAC over the sanctions, six users of Tornado Cash, didn’t see it that way at all. Not moot one bit. Their lawyers got pretty fired up in a court filing back in April. They said OFAC’s response to the appeals court ruling was “a study in chaos.” Ouch. They accused OFAC of just “waving the mootness flag” to try and duck out of a bad judgment against them.
These lawyers told the judge, straight up, “Enough is enough.” They wanted the court to do what the appeals court basically ordered months ago. They wanted the sanctions designation to be officially declared unlawful and wiped away. Permanently. No wiggle room left.
Judge Pitman agreed. And he didn’t mince words in his ruling yesterday. He said the case was absolutely not moot. He sided with the plaintiffs, ruling that OFAC’s original sanctioning of Tornado Cash was unlawful. And the kicker? He permanently blocked OFAC from enforcing sanctions against it ever again. That door is slammed shut, bolted, and probably welded.
The judge pointed out that OFAC didn’t even promise they wouldn’t try to sanction Tornado Cash again. They might just try to do “precisely the same” thing in the future, he wrote. Instead of admitting the appeals court ruling *required* them to de-list Tornado Cash, OFAC claimed they did it based on their own “discretion” and other general policy stuff. Sounded a bit like saying “I cleaned my room because I felt like it,” when your mom just told you to.
Now, this ruling is about the *sanctions* against the Tornado Cash *service* itself. It doesn’t change everything else happening. The U.S. Department of Justice (DOJ) is still going after two guys who were developers for Tornado Cash, Roman Storm and Roman Semenov. They were charged last year with things like helping people launder money and running a money transmitting business (sending money for others) without a license. Semenov is actually still on OFAC’s sanctions list, separate from the service itself.
Interestingly, there’s been a shift happening at the DOJ lately. The second-in-command, Todd Blanche, sent out a memo to his staff earlier this month. He basically told them to narrow down their focus on crypto cases. He said they shouldn’t go after crypto exchanges (places to trade crypto), mixing services like Tornado Cash, or even offline wallets (digital places to store crypto not connected to the internet) just because their users did something wrong or for accidental rule breaking.
Mr. Blanche said any investigations that don’t fit these new, narrower priorities should be dropped. He also mentioned his office would work with the DOJ’s criminal side to figure out what to do with ongoing court cases that don’t meet the new standards. It’s like the boss said, “Okay, let’s focus on the really bad stuff, not every little thing.”
This memo is already making waves in other courtrooms. The lawyers for the two guys who founded another crypto mixer, Samourai Wallet, just asked the judge in their case for more time. They filed a request with the government lawyers on Monday, asking for a 16-day delay on some deadlines. Why? So they can figure out if the charges against them should be dropped because of this new DOJ memo. It seems the memo might be a get-out-of-jail-free card for some.
And the pressure isn’t just internal. A bunch of well-known people in the crypto world also signed a letter this week. It came from a group called the DeFi Education Fund and was sent to David Sacks, who advises the White House on AI and crypto. The letter basically asked President Trump to step in. They want him to stop what they called the “lawless campaign” by the current DOJ to treat open-source software development (that’s making code freely available for anyone to use and improve) like a crime. They specifically mentioned the case against Roman Storm, the Tornado Cash developer.
So, while the Tornado Cash service itself seems safe from U.S. sanctions for good, thanks to the Texas judge, the legal battles for the people involved are far from over. The DOJ memo adds a new layer, maybe offering a lifeline to some, while others keep fighting the charges. It’s a complicated picture, like trying to follow a single drop of water through a fast-moving stream.
