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The Tornado Cash sanctions were overturned because the court ruled that its immutable smart contracts are not “property” under the law, as they cannot be owned, controlled, or altered by any individual or entity.
On Tuesday 26 November, the US appeals court overturned the government’s sanctions against Tornado Cash, one of the most popular crypto mixers. For over two years, any businesses in the country were banned from using its services. Due to these sanctions, the platform’s token TORN lost more than 1,000% of its value in the past few years.
However, the latest decision to overturn these sanctions has boosted TORN’s market activity. Tornado Cash surged more than 400% since the news, reaching its highest price in two years. Yet, TORN’s price is still a far cry from its all-time high of $436.
So, as the US sanctions are dismissed, can Tornado Cash recover its previous market dominance? What is a realistic price projection for TORN in 2025? Let’s discuss.
Tornado Cash sanctions explained
What is Tornado Cash?
Tornado Cash operates as a cryptocurrency mixer. It’s a program on the Ethereum blockchain that helps make crypto transactions more private. It does this through ‘smart contracts’, which are lines of computer code that automatically carry out tasks like mixing and hiding where funds come from or where they go.
The platform was introduced in 2019 as a decentralized, open-source protocol on the Ethereum network. It was unique to other crypto mixers as it operated through smart contracts (self-executing code). It also included both mutable (modifiable) and immutable (permanent and unchangeable) contracts.
Why did the US government sanction it?
Tornado Cash was accused of facilitating money laundering, including for high-profile cybercriminal groups like North Korea’s Lazarus Group. US officials stated that $7billion in cryptocurrency had been laundered through Tornado Cash since its creation. This included $455m linked to Lazarus Group hacks.
On 8 August 2022, the US Treasury Department’s Office of Foreign Assets Control (OFAC) sanctioned Tornado Cash. OFAC added Tornado Cash, its associated Ethereum addresses, and its smart contracts to the Specially Designated Nationals (SDN) list, prohibiting US persons from interacting with it.
The sanctions targeted Tornado Cash for its role in enabling illicit activities, not its lawful uses for privacy. Tornado Cash’s developers and users challenged the sanctions, arguing that the immutable smart contracts could not be legally considered property or controlled entities.
Overturning the sanctions
On 26 November 2024, the Appeals Court for the Fifth Circuit ruled against the government, saying it went too far in sanctioning Tornado Cash’s smart contracts. Here’s why:
- Smart contracts are not “property”:
- The law allows the government to block property, which usually means something you can own, control, or sell (like a house, a bank account, or even software that someone manages).
- Tornado Cash’s smart contracts don’t fit this definition because they’re “immutable”—once created, no one (not even the creators) can change, control, or remove them. They’re just pieces of code running automatically on the blockchain.
- Not a contract or a service:
- For something to be a contract, two parties need to agree on terms. These smart contracts don’t involve any agreements; they simply run on code.
- A service usually involves human effort or someone actively providing help. The court said Tornado Cash’s smart contracts don’t provide a service; they’re tools that people use on their own.
- Government overstepped its authority:
- The law (IEEPA) was written before technologies like blockchain existed. The court said the government can’t apply this law to something like Tornado Cash’s smart contracts without clearer rules from Congress.
- The court pointed out that even with sanctions in place, anyone can still use the smart contracts because they operate independently on the blockchain.
Can Tornado Cash (TORN) keep rising in 2025?
Tornado Cash (TORN) showed an impressive 400% rally after the sanctions were overturned on Tuesday. But will this bullish momentum continue? According to data from TradingView, the Relative Strength Index (RSI) is 88.27 at the time of writing. RSI above 70 is considered overbought, and 88.27 indicates extreme overbought levels. This suggests that TORN is in a strong upward momentum but may be overextended, signaling potential correction or profit-taking soon.
Also, moving averages show 12 buy signals, one neutral, and one sell, indicating a strong bullish trend. The short-term EMA values (10 and 20) are trending significantly above the current price levels, suggesting continued upward momentum. These values confirm the bullish momentum.
Overall, TORN is showing strong bullish momentum based on moving averages, but the extreme RSI and CCI values suggest the rally is overheating. Traders should monitor for potential corrections and look for support at key moving average levels before making further decisions. Long-term holders may want to assess the broader market trends and any news impacting Tornado Cash.
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01.
What is Tornado Cash?
Tornado Cash is a decentralized privacy protocol built on the Ethereum blockchain, designed to enhance transaction privacy by breaking the link between cryptocurrency senders and receivers. It achieves this through smart contracts that mix deposited funds, making it difficult to trace the source or destination of the funds.
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02.
Why was Tornado Cash sanctioned?
The U.S. Treasury sanctioned Tornado Cash in 2022 for allegedly facilitating over $7 billion in money laundering since its creation, including $455 million tied to North Korea’s Lazarus Group. The sanctions were part of efforts to combat illicit financial activities but were overturned in November 2024.
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03.
Should I buy TORN?
TORN’s price is influenced by high volatility and regulatory scrutiny; investors should assess market trends, legal risks, and their risk tolerance before investing.
