Tornado Cash court ruling — Fifth Circuit narrows OFAC scope

The Fifth Circuit ruled OFAC overreached on the Tornado Cash designations. The ruling does not legalize the protocol but it changes the enforcement calculus.

The Fifth Circuit Court of Appeals ruled this week that OFAC overreached when it designated the Tornado Cash smart contracts as sanctioned property. The ruling narrows the legal scope of property under the IEEPA framework and does not extend to immutable smart contract code that lacks an identifiable owner.

The ruling does not legalize the Tornado Cash protocol but it changes the enforcement calculus meaningfully. Front-end operators are still potentially liable; pure protocol use by individual wallets is now legally cleaner than it was a week ago.