The U.S. Fifth Circuit Court ruled Tuesday that the Treasury overstepped by sanctioning Tornado Cash’s immutable smart contracts, stating the autonomous software cannot be classified as property.

The Fifth Circuit held that when smart contracts are immutable—meaning no entity can modify or control them—they cannot be classified as “property” subject to sanctions under existing law.

The decision reverses a lower court ruling and marks a significant win for privacy advocates and blockchain developers seeking clarity to build similar products, according to industry stalwarts.

Immutable smart contracts at the center of the case “are not property because they are not capable of being owned,” noting that over 1,000 participants engaged in a “trusted setup ceremony” that permanently removed any ability to update or control the code, the court found.

As a result, these contracts remain accessible to anyone—including sanctioned North Korean entities—regardless of the Treasury’s Office of Foreign Assets Control (OFAC) designation, 

“Mending a statute’s blind spots or smoothing its disruptive effects falls outside our lane,” the
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Author: Vince Dioquino