United States Court of Appeals for the Fifth Circuit United States Court of Appeals Fifth Circuit

____________ FILED November 26, 2024 No. 23-50669 Lyle W. Cayce ____________ Clerk Joseph Van Loon; Tyler Almeida; Alexander Fisher; Preston Van Loon; Kevin Vitale; Nate Welch,

Plaintiffs—Appellants,

versus Department of the Treasury; Office of Foreign Assets Control; Janet Yellen, Secretary, U.S. Department of Treasury, in her official capacity; Andrea M. Gacki, in her official capacity as Director of the Office of Foreign Assets Control,

Defendants—Appellees. ______________________________

Appeal from the United States District Court for the Western District of Texas USDC No. 1:23-CV-312 ______________________________ Before Jones, Willett, and Engelhardt, Circuit Judges. Don R. Willett, Circuit Judge: The International Emergency Economic Powers Act, an integral part of the modern U.S. sanctions regime, authorizes the President to freeze the assets of, and prohibit transactions with, any foreign actor determined to be a threat to America’s national security. This sweeping delegated power is carried out by the Treasury Department’s Office of Foreign Assets Control (OFAC), which oversees various economic-based sanctions programs. In Case: 23-50669 Document: 123-1 Page: 2 Date Filed: 11/26/2024

No. 23-50669

late 2022, OFAC sanctioned Tornado Cash, an open-source, crypto- transaction software protocol that facilitates anonymous transactions by obfuscating the origins and destinations of digital asset transfers. OFAC blacklisted Tornado Cash for its role in laundering virtual currency for malicious cyber actors—for example, a North Korea-linked hacking group that used Tornado Cash to launder the proceeds of cybercrimes. By adding Tornado Cash to the list of Specially Designated National and Blocked Persons (SDN), OFAC imposed an across-the-board prohibition against any dealings with Tornado Cash “property,” which OFAC defined to include open-source computer code known as “smart contracts.” Tornado Cash’s crypto-mixing smart contracts offer two prized attributes: privacy (by anonymizing digital transactions) and immutability (as the software code is unownable, uncontrollable, and unchangeable—even by its creators). The six plaintiffs-appellants are users of Tornado Cash. They argue that Tornado Cash’s inclusion on the SDN list exceeded OFAC’s statutory authority. The district court disagreed, granting summary judgment to the Department and finding Tornado Cash subject to OFAC’s sanctioning authority. Van Loon and the other plaintiffs appealed, making the same principal argument here—that Tornado Cash’s open-source, self-executing software is not sanctionable under the Act (as opposed to the rogue persons and entities who abuse it). OFAC’s concerns with illicit foreign actors laundering funds are undeniably legitimate. Perhaps Congress will update IEEPA, enacted during the Carter Administration, to target modern technologies like crypto-mixing software. Until then, we hold that Tornado Cash’s immutable smart contracts (the lines of privacy-enabling software code) are not the “property” of a foreign national or entity, meaning (1) they cannot be blocked under IEEPA, and (2) OFAC overstepped its congressionally defined authority.

2 Case: 23-