US Treasury withdraws Tornado Cash appeal after court rules sanctions unenforceable

The US Treasury has withdrawn its appeal against Tornado Cash, officially ending a legal case over economic sanctions slapped on the crypto tool.

This decision was filed with the Eleventh Circuit Court of Appeals, which then tossed the judgment and told the lower court to dismiss the case entirely.

The ruling means the government’s guidance on enforcing those sanctions is now dead. This comes after Coin Center and the Treasury agreed to kill the case, as confirmed by Bloomberg Law.

Two paragraphs into the ruling, it’s clear the Treasury didn’t want this battle anymore. The court had heard oral arguments on November 19 but never ruled. Instead of waiting, both sides filed a joint motion to wipe the judgment, which was granted.

The tool in question, Tornado Cash, is a Russian-developed crypto mixer. And with this latest move, its place on the sanctions list is no longer active.

Storm still stands trial despite Tornado Cash sanctions resolution

While the civil battle over sanctions has ended, Storm’s criminal trial is moving forward, and the charges are far heavier than anything brought by the US Securities and Exchange Commission. Storm is set to go on trial from July 14.

The Department of Justice claims Storm and fellow developer Roman Semenov were responsible for laundering over $1 billion, some of which allegedly came from the Lazarus Group, a North Korean hacking outfit tied to massive crypto heists.

Despite the serious allegations, US courts have shown more openness to the defense put forward by Storm and his legal allies.

Storm, backed by Coinbase and the Ethereum Foundation, argues that the government is targeting software code, not actions. The entire defense hinges on that point. And while it may have seemed unlikely at first, it’s starting to get traction. A separate civil case has also been built around this same argument, adding more legal pressure on the government’s stance.

In May 2024, Alexey Pertsev, another Tornado Cash developer, was convicted by a Dutch court for money laundering and sentenced to five years in prison. He had argued that smart contracts on Tornado Cash run automatically, and he had no direct control.

The judges rejected that reasoning and held him accountable anyway.

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