A federal court has permanently barred the U.S. Treasury from reimposing sanctions on Tornado Cash, a crypto mixer, in a significant win for advocates of privacy in the cryptocurrency space. Judge Robert Pitman of the U.S. District Court for the Western District of Texas ruled that the Treasury's actions were unlawful, affirming the Fifth Circuit's November ruling that dismissed the notion of smart contracts as sanctionable property. The judge also denied the government's claim that the case was moot after they voluntarily delisted Tornado Cash, emphasizing that such delisting does not preclude future sanctions. The ruling reinforces the precedent that immutable smart contracts cannot be classified as property under existing law, ultimately shaping how decentralized finance services are regulated. This development follows the DOJ's recent announcement that it will no longer pursue criminal charges against crypto mixing services unless involved in illegal activities.

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