https://www.moneylaundering.com/news/ofacs-tornado-cash-designation-was-unlawful-us-appeals-court-rules/

The 5th U.S. Circuit Court of Appeals ruled Tuesday that the Office of Foreign Assets Control exceeded the statutory bounds of the International Economic Emergency Powers Act by blacklisting Tornado Cash, a notorious cryptocurrency-mixing service, in August 2022.

Plaintiffs argued that the “open-source, self-executing software” employed by Tornado Cash, which U.S. authorities have accused of laundering hundreds of millions of dollars of cryptocurrency for state-sponsored hackers and other criminals, does not constitute a foreign-held “property” as defined by IEEPA, and is therefore “unsanctionable” under the 1977 law.

“IEEPA grants the president broad powers to regulate a variety of economic transactions, but its language is not limitless,” the three-judge panel warned in overturning an earlier decision that upheld OFAC’s designation of Tornado Cash. “Mending a statute’s blind spots or smoothing its disruptive effects falls outside our lane.”

The 34-page ruling instructs the U.S. District Court for the Western District of Texas to grant a partial motion for summary judgment in favor of the plaintiffs, all of whom used Tornado Cash prior to the designation.