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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
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late 2022, OFAC sanctioned Tornado Cash, an open-source, cryptotransaction 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
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We REVERSE and REMAND to the district court with
instructions to grant Van Loon’s motion for partial summary judgment based
on the Administrative Procedure Act.
I
Before getting to the legal analysis, we first offer a primer on
cryptocurrency and blockchain.1
Unlike traditional fiat currencies, such as the U.S. dollar,
cryptocurrency is a decentralized and fully digital form of currency. Like fiat
currencies, there are many kinds of cryptocurrency, and each is associated
with a unique “coin” that serves as its record of value. These coins, like fiat
currencies, can be traded, transferred, invested, and used to pay for goods
and services.
Cryptocurrency’s value is recorded on a “blockchain.” Blockchains
function like a bank’s ledger in that they record all transfers of data2—
including, as relevant to this case, transactions. But unlike a bank ledger,
blockchains are “public, permanent, permissionless, and maintained through
a decentralized network of independent computers” or online users. In
_____________________
1
We recognize that ongoing litigation challenges whether certain crypto assets are
currency or securities that are subject to regulation by the Securities and Exchange
Commission. Our descriptions of cryptocurrency, blockchain, Ethereum, and Ether in this
opinion do not answer that question and merely reflect the language used in the briefing
and in the record. Likewise, when we make analogies to the banking industry, we do not
weigh in on whether crypto is a part of the banking industry, another issue that is currently
being litigated.
2
David Rodeck, Understanding Blockchain Technology, Forbes (May 23, 2023),
available at https://www.forbes.com/advisor/investing/cryptocurrency/what-isblockchain/ [https://perma.cc/V6TE-L6EV].
3
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essence, each transaction is a stored on a “block” added to the “chain” of all
prior transactions—and is publicly viewable forever.3
Cryptocurrency users hold their coins in “wallets.” Wallets have both
public and private identifiers: addresses (which are public account
identifiers) and keys (which function like passwords). Each time a user
transacts with cryptocurrency, the transaction is posted to the blockchain and
is visible to anyone. After a validation process, the blockchain displays the
sender’s address, the recipient’s address, and the amount of cryptocurrency
exchanged.
The addresses are, in theory, pseudonymous, and thus only the
cryptocurrency user typically knows the transaction is his or hers. However,
de-anonymization is not impossible. Onlookers can identify transaction
participants if they can match a public address to an identifiable person.4 And
once that happens, the blockchain reveals other transactions that belong to
the same person and potentially reveals sensitive information about that
person based on how they transfer their coins.5 As a result, some
cryptocurrency users want additional options to keep their transactions
private.
_____________________
3
Id.; see also Ethereum Block Structure, Geeks for Geeks (Aug. 22, 2024), available
at https://www.geeksforgeeks.org/ethereum-block-structure/ [https://perma.cc/X56H-
ZR3Q].
4
Satoshi Nakamoto, Bitcoin: A Peer-to-Peer Electronic Cash System, at 6 (2008),
available at https://www.ussc.gov/sites/default/files/pdf/training/annual-nationaltraining-seminar/2018/Emerging_Tech_Bitcoin_Crypto.pdf [https://perma.cc/24VZ-
799N].
5
See id. (“[I]f the owner of a key is revealed, linking [on the public ledger] could
reveal other transactions that belonged to the same owner.”); see, e.g., Matter of Search of
Multiple Email Accts. Pursuant to 18 U.S.C. § 2703 for Investigation of Violation of
18 U.S.C.
§ 1956 et al,
585 F. Supp. 3d 1, 8 (D.D.C. 2022) (detailing such surveillance).
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A
One type of cryptocurrency coin is Ether (ETH), created and used in
the Ethereum blockchain network. There are two kinds of Ethereum
accounts: externally owned accounts and smart contracts.
An externally owned account is a wallet that can be controlled by
anyone with the address and corresponding private key. So if a person wants
to initiate a transaction from the wallet they control, they send a request to
the Ethereum blockchain and pay a transaction fee—referred to as gas fees—
in Ether. An individual known as a validator then verifies and executes the
transaction by editing the blockchain to reflect the sending and receiving
accounts’ new balances. Only individuals who stake significant amounts of
Ether as collateral may become validators, to ensure the blockchain’s edits
are legitimate.
The second type of account, a smart contract, is a software or
computer program that is uploaded onto the blockchain network. These
accounts do not require validators. Instead, the software is programmed to
automatically perform tasks, such as executing transactions, transferring
cryptocurrency assets, and creating new smart contracts, once prompted by
a user. Once a smart contract is deployed on the blockchain, it is assigned a
public address with which any user can interact. As an example, a “simple
vendor smart contract” could create and assign ownership of some digital
asset once a user sends Ether to a specified recipient’s address. Like all other
transactions, a transaction using a smart contract incurs a gas fee, which
varies depending on the smart contract’s complexity.
Smart contracts come in two forms: “mutable” and “immutable.” A
mutable smart contract is one which is managed by some party or group and
may be changed. An immutable smart contract, on the other hand, cannot be
altered or removed from the blockchain. Importantly, a mutable contract may
5
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be altered to become immutable. But that is an irreversible step; once a smart
contract becomes immutable, no one can reclaim control over it.
B
Enter Tornado Cash.
Tornado Cash is a decentralized, open-source software project
developed by a group of contributors who uploaded a series of smart
contracts to the Ethereum blockchain in 2019. Some of the developers
included Roman Storm and two Russian nationals, Alexey Pertsev and
Roman Semenov. Pertsev, who has provided material and technological
support to the Federal Security Service of Russia, was arrested by Dutch
authorities on money-laundering charges.6 And the U.S. indicted Storm and
Semenov on similar money-laundering charges.7
As of 2022, the Tornado Cash software included both mutable and
immutable smart contracts, all of which are open-source and stored on the
Ethereum blockchain. Relevant to this appeal are a set of Tornado Cash-developed smart contracts that provide increased anonymity by
“collect[ing], pool[ing], and . . . shuffl[ing] the cryptocurrencies deposited
by many users.” These smart contracts, like other software codes that
perform similar tasks, are called “mixers.”
So how do these smart contracts work in practice? Users first deposit
crypto into a specific “pool” smart contract based on the amount and type of
_____________________
6
FIOD Belastingdienst, Arrest of Suspected Developer of Tornado Cash (Aug. 12,
2022), available at https://www.fiod.nl/arrest-of-suspected-developer-of-tornado-cash/
[https://perma.cc/RCC7-QMQ2].
7
Press Release, U.S. Attorney’s Office (S.D.N.Y.), Tornado Cash Founders
Charged With Money Laundering And Sanctions Violations (Aug. 23, 2023), available at
https://www.justice.gov/usao-sdny/pr/tornado-cash-founders-charged-money-laundering-and-sanctions-violations [https://perma.cc/2K7P-VJZU].
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crypto they want to mix. For example, someone who wants to deposit and
withdraw 100 Ether would start by sending 100 ETH to the “100 ETH Pool
Contract.” That transaction would look something like this:
100 ETH Pool
Person A's 100 ETH Smart Contract
Address
Address
Depositors then receive keys or a password entitling the holder to
withdraw the same amount from a given pool, and this withdrawal can be
made to an entirely different wallet than the depositing wallet, thus
“sever[ing]” “any public link between the deposit and withdrawal
addresses.” The software code that forms the pool smart contract will trigger
a withdrawal from the pool only after it verifies the password. So when the
person goes to withdraw the amount to a second address, the second
transaction would look something like this:
100 ETH Pool
Person A's Second
Smart Contract 100 ETH
Address
Address
These two transactions form the foundation of the Tornado Cash
mixing process. And the entire process occurs automatically—with no
human intervention.
But the Tornado Cash pool smart contracts depend on “a critical mass
of users concurrently depositing and withdrawing transactions to obfuscate
links between deposit and withdrawal addresses.” The more users deposit
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coins in a pool, the more anonymous it is. So if only one person were using
the 100 ETH pool smart contract to mix their transfer, the transaction would
be easily traceable:
100 ETH Pool
Person A's
Person A's Smart
100 ETH 100 ETH Second
Address Contract
Address
Address
But if even five people were using the 100 ETH pool smart contract, it
becomes more difficult to trace any transfer of 100 ETH to a particular
address:
Now imagine this complexity amplified with thousands of users. The result:
a highly obfuscated blockchain that is much harder to trace and consequently
renders the transactors far more anonymized.
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Although some of the Tornado Cash-developed smart contracts were
immutable from the start, the developers initially retained the ability to
update the pool smart contracts’ codes—in other words, the pool smart
contracts were originally mutable. But in 2020, the developers announced a
“trusted setup ceremony” in which they would eliminate their control over
the pool smart contracts. In that ceremony, more than 1,100 users
participated, and at least twenty smart contracts—including the pool smart
contracts—became irreversibly immutable. Consequently, the pool smart
contracts became self-executing and could no longer be altered, removed, or
controlled.
C
After the pool contracts became immutable, the original developers of
Tornado Cash announced the creation of a decentralized autonomous
organization (DAO) and a new crypto token called TORN, which can be
transferred and sold on the blockchain like any other crypto asset. There are
currently 1.5 million TORN tokens in circulation, and owning TORN
allows, but does not require, individuals to vote on a limited subset of DAO
governance issues. In fact, TORN holders must register their TORN tokens
to be able to vote on any of those issues. To register their TORN tokens,
individuals must lock their TORN into another mutable “governance”
smart contract. Most TORN token holders have never taken these steps.
The DAO can only vote to implement new projects and change
certain optional Tornado Cash features. It cannot vote on or make any
changes to immutable smart contracts, such as the pool smart contracts.
D
Even though the pool smart contracts help to anonymize transactions,
those transactions aren’t fully anonymized because they still incur gas fees.
The withdrawing account must pay the gas fee to the Ethereum network to
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extract Ether from a pool. And “sending Ether to the withdrawal account
prior to withdrawal might create a link between the user’s deposit and
withdrawal accounts”—the existence of which the Tornado Cash pool smart
contracts are designed to obscure. For example, if the gas fee was 1 ETH, the
transaction would still be traceable, as seen in the example below:
To combat this problem, Tornado Cash developers continued to
develop additional anonymity tools, such as the use of relayers, which are
mutable smart contracts operated by third parties. Relayers function like
middlemen who pay the gas fees from their own accounts, deducting the cost
of those fees—as well as their own relayer fees—from the amount withdrawn
from the pool. Relayers never have custody over users’ Ether, as the smart
contract ensures that withdrawn Ether are only ever sent to the user’s
withdrawal account. The relayers then send the remaining amount to the
account receiving the withdrawal. Thus, the relayers can eliminate any link
between the deposit and withdrawal accounts. For example, if the gas fee was
1 ETH and the relayer fee was 2 ETH, the (simplified) complete transaction
would look something like this:
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The Tornado Cash developers created a mutable smart contract that
maintains a registry of relayers, separate from the immutable pool smart
contracts. Anyone can become a relayer for Tornado Cash by staking a
specified amount of TORN, at which point they are added to the relayer
registry.
For most (though not all) transactions processed by a third-party
relayer, the mutable relayer-registry smart contract collects a fee from the
relayer and pays it to the TORN token holders who have locked their
TORN into the mutable governance smart contract. This fee is separate
from the gas fee paid to the Ethereum network. For example, if the gas fee
was 1 ETH, the relayer fee was 1 ETH, and the relayer-registry fee was 1
ETH, the complete transaction would look something like this:
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The use of relayers—and the mutable relayer-registry smart
contract—is entirely optional. Indeed, not all users of the immutable pool
smart contracts use relayers.
E
The use of mixers like the Tornado Cash immutable smart contracts
is, well, mixed. For example, law-abiding cryptocurrency users employ
mixers to maintain anonymity concerning their net worth, spending habits,
and donations to political causes. Mixers can also be used to thwart criminals
that would use this information to identify potential victims or set up
phishing schemes. For example, plaintiff Joseph Van Loon sought to use
Tornado Cash to run a blockchain service without falling prey to malicious
cyberattacks. Plaintiff Tyler Almeida used Tornado Cash to anonymously
donate to the Ukrainian war effort because he was worried that Russian
hacker groups would target him specifically if they were able to easily trace
the donation back to him. Plaintiff Kevin Vitale turned to Tornado Cash after
learning that someone had linked his crypto activities to his physical address.
Plaintiff Alexander Fisher used Tornado Cash to develop code that improved
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the uses of the Ethereum blockchain network. And plaintiff Nate Welch used
Tornado Cash to protect his privacy and to avoid harassment from malicious
actors.
However, mixers are also “go-to tool[s] for cybercriminals” seeking
to launder stolen cryptocurrency. Nearly a quarter of funds sent to mixers in
2022 were tied to money laundering efforts. Most relevant to this case, North
Korea, through one of its cybercriminal organizations known as the Lazarus
Group, has hacked and stolen just shy of one billion dollars’ worth of
cryptocurrency. And all of that dirty money needed to be laundered before it
could be cashed out for traditional (and far more liquid) fiat currencies. So
North Korean hackers turned to mixers. More than 65 percent of North
Korea’s dirty crypto went through mixers in 2021, “up from 42 percent in
2020 and 21 percent in 2019.” And how does North Korea use this laundered
money? To fund its weapons of mass destruction and ballistic missile
programs.
II
We now turn to the relevant statutory authority and agency action.
The International Emergency Economic Powers Act allows the
President to exercise extraordinary economic powers after “declar[ing] a
national emergency with respect to” “any unusual and extraordinary threat,
which has its source in whole or substantial part outside the United States, to
the national security, foreign policy, or economy of the United States.”8 This
includes blocking “any property in which any foreign country or a national
_____________________
8
50 U.S.C. § 1701(a).
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thereof has any interest.”9 Similarly, the North Korea Sanctions and Policy
Enhancement Act permits the President to “designate . . . any person that
[he] determines” is engaged in certain prohibited activities with respect to
North Korea.10 Once the President designates a person, they are listed as an
SDN, and the President may “exercise all of the powers granted to [him]
under the International Emergency Economic Powers Act” “to the extent
necessary to block and prohibit all transactions in property and interests in
property of [that] person.”11
President Obama invoked these Acts in two executive orders relevant
to this case. First, he blocked the property and interests in property of those
persons that the Department of the Treasury determined “to have materially
assisted, sponsored, or provided financial, material, or technological support
for, or goods or services to or in support of” North Korea or other persons
that materially supported it in its “continuing pursuit” of “nuclear and
missile programs.”12 Second, President Obama blocked the property and
interests in property of both (1) “any person” determined by the Department
to be “responsible for,” or “directly or indirectly” “engaged” in certain
cyber-enabled activities that threaten the United States’ national security,
foreign policy, and economy, and (2) any person determined “to have
_____________________
9
Id. § 1702(a)(1)(B); see, e.g., Exec. Order No. 12,978,
60 Fed. Reg. 54,579 (Oct.
21, 1995) (blocking assets of persons who “play a significant role in international narcotics
trafficking centered in Colombia”); Exec. Order No. 13,382,
70 Fed. Reg. 38,567 (June 28,
2005) (blocking assets of persons who have engaged in transactions that have materially
contributed to the proliferation of weapons of mass destruction and their supporters).
10
22 U.S.C. § 9214(a), (b).
11
22 U.S.C. § 9214(c)(1); see also
22 U.S.C. § 9214(c)(2).
12
Exec. Order No. 13,722, 81 Fed. Reg. 14,943, 14,944 (Mar. 18, 2016).
14
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materially assisted, sponsored, or provided financial, material, or
technological support for” such activities.13
Both orders confer rulemaking authority on the Department and allow
it “to employ all powers granted to the President by [the Act] as may be
necessary to carry out” their purposes.14 The Department, in turn, delegated
authority to block persons under these orders to one of its internal agencies,
the Office of Foreign Assets Control (OFAC).
OFAC issued regulations through these delegations, including
definitional regulations for the words “person,”15 “entity,”16 “property,”17
and “interest.”18 It also provided avenues for those affected by blocking
designations to present a challenge, and it sometimes grants licenses to
engage in transactions involving blocked property.19
A
On August 8, 2022, OFAC designated as entities the website
tornado.cash, 37 Tornado Cash smart contracts (including at least twenty
immutable smart contracts), and an address that was used to accept
donations, citing North Korea’s use of Tornado Cash to commit cybercrimes
_____________________
13
Exec. Order No. 13,694, 80 Fed. Reg. 18,077 (Apr. 2, 2015).
14
80 Fed. Reg. at 18,079; 81 Fed. Reg. at 14,945; see 50 U.S.C. § 1704 (authorizing
the President to “issue such regulations, including regulations prescribing definitions, as may
be necessary for the exercise of the authorities granted” by IEEPA (emphasis added)).
15
31 C.F.R. §§ 510.322, 578.313.
16
Id. §§ 510.305, 578.305.
17
Id. §§ 510.323, 578.314.
18
Id. §§ 510.313, 578.309.
19
Id. §§ 501.807 (outlining procedures governing delisting from the SDN list),
510.501 (concerning licensing procedures), 578.404 (concerning the blocking of
transactions ordinarily incident to a licensed transaction).
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like the laundering of stolen crypto.20 Three months later, OFAC withdrew
the August 8 designation and issued a new designation, which included 53
Ethereum addresses associated with the Tornado Cash software. The
designations identified Tornado Cash as an entity organized by and under its
DAO, and in doing so blocked “all real, personal, and other property and
interests in property” of the designated Tornado Cash entity subject to U.S.
jurisdiction. OFAC does not claim that Tornado Cash software is itself a
product of North Korea or in any way owned or controlled by North Korea—
but rather that some transactions using Tornado Cash software involved the
North Korean Lazarus Group. The Lazarus Group had already been added
to the SDN list. After it added Tornado Cash to the SDN list, OFAC issued
notices reminding Tornado Cash users that they could request licenses to
retrieve funds trapped within Tornado Cash pools and made clear that people
could interact with its open-source code, just not with its transaction and
pooling functions.21
Six Tornado Cash users sued the Department under three theories.
Their primary theory, and the only one advanced on appeal,22 asserts that
OFAC violated the Administrative Procedure Act.23 They claim that
OFAC lacked the authority to designate Tornado Cash as an SDN because
(1) Tornado Cash is not a foreign “national” or “person,” (2) the immutable
pool smart contracts are not “property,” and (3) Tornado Cash cannot have
_____________________
20
80 Fed. Reg. at 18,077; 81 Fed. Reg. at 14,943.
21
See OFAC, U.S. Dep’t of the Treasury, Frequently Asked Questions (Sept. 13,
2022), available at https://ofac.treasury.gov/faqs/topic/1546 [https://perma.cc/9FDC-
42M4].
22
The users also claimed that OFAC’s designation violated the First and Fifth
Amendments but did not appeal their loss on those grounds.
23
5 U.S.C. §§ 551 et seq.;
5 U.S.C. §§ 701 et seq.
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a property “interest” in the immutable smart contracts. The district court
granted the Department’s motion for summary judgment and denied that of
the Tornado Cash users, concluding: (1) Tornado Cash is an “entity that may
be properly designated as a person under IEEPA,” (2) that smart contracts
constitute “property,” (3) and that the DAO, which runs Tornado Cash, has
an “interest” in its smart contracts because it derives profits from its crypto
mixing and relaying services that run on smart contracts.
The Tornado Cash users timely appealed.
III
We review cross-motions for summary judgment de novo.24 Summary
judgment is warranted if “there is no genuine dispute as to any material fact
and the movant is entitled to judgment as a matter of law.”25 When parties
file cross-motions for summary judgment, we review “each party’s motion
independently, viewing the evidence and inferences in the light most
favorable to the nonmoving party.”26
Because “the actions of the Treasury Department in designating”
Tornado Cash “are governed by the judicial review provisions of the APA,”
we must affirm “if [] OFAC’s actions were not arbitrary and capricious, and
were based on substantial evidence.”27
_____________________
24
Morgan v. Plano Indep. Sch. Dist., 589 F.3d 740, 745 (5th Cir. 2009).
25
Fed. R. Civ. P. 56(a).
26
Ford Motor Co. v. Tex. Dep’t of Transp., 264 F.3d 493, 498 (5th Cir. 2001).
27
Holy Land Found. for Relief & Dev. v. Ashcroft, 333 F.3d 156, 162 (D.C. Cir. 2003);
see also
5 U.S.C. § 706(2)(A).
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IV
The International Emergency Economic Powers Act and the North
Korea Sanctions and Policy Enhancement Act vest the President with the
authority to regulate (or block) “property”28 in which a foreign “national”
or “person” (or “entity”)29 has an “interest.”30 Van Loon argues that the
district court erred in giving “heightened deference” to OFAC’s definition
of “property” and in finding that the immutable smart contracts met that
definition. We agree. And because that element is dispositive, we need not
address the other elements.
A
This case is only the fifteenth in this circuit31 to consider agency
deference in the wake of Loper Bright v. Raimondo,32 which overruled
Chevron, U.S.A., Inc. v. Natural Resources Defense Council, Inc.33 and
eliminated the “judicial invention” of deference to administrative action and
rulemaking.34
In Loper Bright, the Supreme Court “clarified ‘the unremarkable, yet
elemental proposition reflected in judicial practice dating back to Marbury’
that ‘courts decide legal questions by applying their own judgment,’ even in
_____________________
28
50 U.S.C. § 1702(a)(1)(B);
22 U.S.C. § 9214(c)(1), (2).
29
22 U.S.C. § 9214(a)–(c);
50 U.S.C. § 1702(a).
30
50 U.S.C. § 1702(a)(1)(B);
22 U.S.C. § 9214(c)(1), (2).
31
Many of these cases remanded to the district court for initial review in light of
Loper Bright. See, e.g., Utah v. Su, 109 F.4th 313, 322 (5th Cir. 2024); Arnesen v. Raimondo,
No. 24-60055,
2024 WL 3912178, at *3 (5th Cir. Aug. 23, 2024).
32
144 S. Ct. 2244 (2024).
33
467 U.S. 837 (1984).
34
Loper Bright, 144 S. Ct. at 2272.
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agency cases.”35 When “Congress has clearly delegated discretionary
authority to an agency, we discharge our duty by ‘independently
interpret[ing] the statute and effectuat[ing] the will of Congress subject to
constitutional limits.’”36 In effect, the Supreme Court has instructed that we
must “independently identify and respect [constitutional] delegations of
authority, police the outer statutory boundaries of those delegations, and
ensure that agencies exercise their discretion consistent with” the
Administrative Procedure Act or have engaged in reasoned decisionmaking
within those boundaries.37 To do so, we must “determine the ‘best’ reading
of a statute; a merely ‘permissible’ reading is not enough.”38
B
“As usual, we start with the statutory text.”39 Where a statute leaves
terms undefined, we accord those terms their “ordinary, contemporary,
common meaning.”40 And the “ordinary” or “plain” meaning of
“property” compels summary judgment in Van Loon’s favor.
Under the International Emergency Economic Powers Act, the
President is permitted to “block . . . any property in which any foreign country
_____________________
35
Mayfield v. United States Dep’t of Lab., No. 23-50724, 2024 WL 4142760, at *4
(5th Cir. Sept. 11, 2024) (quoting Loper Bright, 144 S. Ct. at 2261).
36
Id. (alteration in original) (quoting Loper Bright, 144 S. Ct. at 2263).
37
Id. (alteration in original) (internal quotation marks omitted) (quoting Loper
Bright, 144 S. Ct. at 2263, 2268).
38
Id. (quoting Loper Bright, 144 S. Ct. at 2266).
39
Tanzin v. Tanvir, 592 U.S. 43, 46 (2020).
40
Rest. L. Ctr. v. United States Dep’t of Lab., No. 23-50562, 2024 WL 3911308, at
*5 (5th Cir. Aug. 23, 2024) (internal quotation marks and citations omitted); see also Conn.
Bank of Com. v. Republic of Congo,
309 F.3d 240, 260 (5th Cir. 2002).
19
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No. 23-50669
or a national thereof has any interest.”41 Although the statute does not define
“property,” property has a plain meaning: It is capable of being owned.
First, take dictionary definitions contemporaneous with the statute’s
passage in 1977.42 Property includes “everything which is or may be the
subject of ownership, whether a legal ownership, or whether beneficial, or a
private ownership.”43 Similarly, it is “the condition of being owned by or
_____________________
41
50 U.S.C.A. § 1702(1)(1)(B).
42
See 50 U.S.C. § 1702; Taniguchi v. Kan Pacific Saipan, Ltd.,
566 U.S. 560, 566–
69 (2012) (discussing usefulness of contemporary dictionary definitions in interpreting
statutes); VanDerStok v. Garland,
86 F.4th 179, 189 (5th Cir. 2023), cert. granted,
144 S. Ct.
1390 (2024) (“[T]he meanings of statutes do not change with the times. ‘This Court
normally interprets a statute in accord with the ordinary public meaning of its terms at the
time of its enactment. After all, only the words on the page constitute the law adopted by
Congress and approved by the President.’” (quoting Bostock v. Clayton Cnty.,
590 U.S. 644,
654 (2020))). And as additional support, the meaning of “property” hasn’t changed over
time. See Property, Webster’s New International Dictionary of the
English Language 1984 (2d ed. 1941) (“the exclusive right to possess, enjoy, and
dispose of, a thing; ownership”); Noah Webster, Property, American
Dictionary of the English Language (1828),
https://webstersdictionary1828.com/Dictionary/Property [https://perma.cc/6CWZ-
6BXM] (“The exclusive right of possessing, enjoying and disposing of a thing;
ownership”); Samuel Johnson, Property, Dictionary of the English
Language (1773), https://johnsonsdictionaryonline.com/1773/property_ns
[https://perma.cc/QH5Y-CFSY] (defining property as the “right of possession” and “the
thing possessed” and referring to “[p]roperty, whose original is from the right a man has
to use any of the inferior creatures, for subsistence and comfort, is for the sole advantage
of the proprietor, so that he may even destroy the thing that he has property in. Locke.”);
see also Missouri Pac. R. Co. v. United States,
271 U.S. 603, 607 (1926) (“In a sense, words
do not change their meaning.”); Jennifer Senior, In Conversation: Antonin Scalia, New
York Magazine (Oct. 4, 2013), https://nymag.com/news/features/antonin-scalia-
2013-10/ [https://perma.cc/QJC2-H8PK] (“Words have meaning. And their meaning
doesn’t change.”).
43
Property, Black’s Law Dictionary 1095 (5th ed. 1979); see also Property,
The Random House College Dictionary 1061 (1973) (“ownership; right of
possession or disposal of anything”); Property, The Random House College
Dictionary 1061 (1982) (same).
20
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belonging to some person or persons”44 and encompasses “the right to
possess, use, and dispose of something.”45 It also includes the right “to
exclude everyone else from interfering with it.”46 And even the Department
seems to agree:
The term “property” refers to “the rights in a valued resource such
as land, chattel, or an intangible,” and can be applied “to every kind
of valuable right and interest that can be made the subject of ownership.”
The term “ownership” refers to “[t]he bundle of rights allowing one
to use, manage, and enjoy property.”47
Sure, “[o]wnership does not always mean absolute dominion,”48 but it at least
requires some dominion.
The Supreme Court—and a long history of scholarship, beginning
with William Blackstone—has reaffirmed this ordinary meaning. The
Supreme Court has defined property as “all objects or rights which are
_____________________
44
Property, Oxford English Dictionary (2d ed. 1989).
45
Property, Webster’s New World Dictionary of the American
Language 1167 (college ed. 1968) (“the right to possess, use, and dispose of something;
ownership” or “a thing or things owned”).
46
Property, Black’s Law Dictionary 1382 (4th ed. 1968) (“that which is
peculiar or proper to any person; that which belongs exclusively to one… more specifically,
ownership the unrestricted and exclusive right to a thing; the right to dispose of a thing in
every legal way, to possess it, to use it, and to exclude every one else from interfering with
it”).
47
Brief of Appellee at 36 (emphasis added) (citing Property, Black’s Law
Dictionary (12th ed. 2024) (quotation marks omitted); Ownership, Black’s Law
Dictionary (12th ed. 2024)).
48
Brief of Appellee at 37 (emphasis added) (citing Marsh v. Alabama, 326 U.S. 501,
506 (1946)).
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susceptible of ownership.”49 Indeed, when someone has a property interest,
he or she typically has the “rights of possession and control.”50 And “one of
the most essential sticks in the bundle of rights that are commonly
characterized as property” is “the right to exclude others.”51
The immutable smart contracts at issue in this appeal are not property
because they are not capable of being owned. More than one thousand
volunteers participated in a “trusted setup ceremony” to “irrevocably
remov[e] the option for anyone to update, remove, or otherwise control those
lines of code.” And as a result, no one can “exclude” anyone from using the
Tornado Cash pool smart contracts. In fact, because these immutable smart
contracts are unchangeable and unremovable, they remain available for
anyone to use and “the targeted North Korean wrongdoers are not actually
blocked from retrieving their assets,” even under the sanctions regime. Simply
put, regardless of OFAC’s designation of Tornado Cash, the immutable
_____________________
49
Meyer v. United States, 364 U.S. 410, 412 n.3 (1960); see also United States v.
Blagojevich,
794 F.3d 729, 736 (7th Cir. 2015); Haze El Bey Express Tr. v. Hill, No. 20-cv-
3516,
2021 WL 3829162, at *3 (S.D. Tex. Apr. 22, 2021).
50
Property Interest, Black’s Law Dictionary (12th ed. 2024) (“[a]n interest,
perhaps including rights of possession and control, held by an owner, beneficiary, or
remainderman in land, real estate, business, or other tangible items”); see also United States
v. Craft, 535 U.S. 274, 278 (2002) (“A common idiom describes property as a ‘bundle of
sticks’—a collection of individual rights which, in certain combinations, constitute
property.” (citing Benjamin Cardozo, Paradoxes of Legal Science 129
(reprt. 2000) (1928); Dickman v. Commissioner,
465 U.S. 330, 336 (1984))).
51
Dolan v. City of Tigard, 512 U.S. 374, 384 (1994) (internal quotation marks and
citation omitted); see also Cedar Point Nursery v. Hassid,
594 U.S. 139, 149–50 (2021) (“The
right to exclude is ‘one of the most treasured’ rights of property ownership. According to
Blackstone, the very idea of property entails ‘that sole and despotic dominion which one
man claims and exercises over the external things of the world, in total exclusion of the
right of any other individual in the universe.’” (citing 2 W. Blackstone,
Commentaries on the Laws of England 2 (1766))); Thomas Merrill, Property
and the Right to Exclude,
77 Neb. L. Rev. 730, 752 (1998) (calling the right to exclude the
“sine qua non” of property).
22
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smart contracts continue operating. And furthermore, because the software
continues to operate regardless of the sanctions, and the blockchain
technology “allows peer-to-peer transfers . . . without requiring the recipient
to consent to transfer,” some users may become liable whenever someone
transfers them digital assets via Tornado Cash, even without their knowledge
or consent.
Sure, some smart contracts are capable of being owned in the sense
that Tornado Cash developers can create new smart contracts and
disconnect old mutable contracts. In theory, should Tornado Cash developers
choose to comply with sanctions on mutable smart contracts, those
developers could disconnect those mutable smart contracts to make them
inaccessible and unusable by anyone on the Ethereum blockchain. But they
cannot discard, change, disconnect, or control smart contracts that are
immutable—like the ones currently listed on OFAC’s SDN list and at issue
in this appeal. Even with the sanctions in place, “those immutable smart
contracts remain accessible to anyone with an internet connection.”
C
Our inquiry could end here: The plain meaning of “property” in the
Act does not support the Department’s designation of Tornado Cash. But
the Department points us to “OFAC’s longstanding regulatory definition of
‘any property,’” which includes “contracts of any nature” and “services of
any nature,” and suggests that OFAC’s definition supports the smart
contracts’ status as “property” under the Act. Regardless of whether Loper
Bright does or does not require us to assess OFAC’s definition,52 (1) even
_____________________
52
Loper Bright, 144 S. Ct. at 2263 (recognizing that a “statute’s meaning may well
be that the agency is authorized to exercise a degree of discretion” when the statute
“‘expressly delegate[s]’ to an agency the authority to give meaning to a particular statutory
23
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No. 23-50669
under OFAC’s definitions, the immutable smart contracts still must be
ownable; (2) they aren’t contracts; and (3) they aren’t services. And
accordingly, the immutable smart contracts are outside the scope of
OFAC’s designation authority.
1
Assuming we were to consider OFAC’s regulatory definition of
“property,” the immutable smart contracts cannot qualify because they are
incapable of being owned. Indeed, OFAC’s regulatory definition embraces
the plain meaning of “property,” as OFAC merely provides a laundry list of
“illustrative examples, all of which are items typically understood as
belonging to individuals or entities.”53 For example, according to OFAC,
“[t]he terms property and property interest include money, checks,
drafts, . . . services of any nature whatsoever, contracts of any nature
whatsoever, and any other property, real, personal, or mixed, tangible or
_____________________
term,” “‘fill up the details’ of a statutory scheme,” or “regulate subject to the limits
imposed by a term or phrase that ‘leaves agencies with flexibility, . . . such as ‘appropriate’
or ‘reasonable.’” (emphasis added) (internal citations omitted)).
53
See 31 C.F.R. § 510.323 (“The terms property and property interest include
money, checks, drafts, bullion, bank deposits, savings accounts, debts, indebtedness,
obligations, notes, guarantees, debentures, stocks, bonds, coupons, any other financial
instruments, bankers acceptances, mortgages, pledges, liens or other rights in the nature of
security, warehouse receipts, bills of lading, trust receipts, bills of sale, any other evidences
of title, ownership, or indebtedness, letters of credit and any documents relating to any
rights or obligations thereunder, powers of attorney, goods, wares, merchandise, chattels,
stocks on hand, ships, goods on ships, real estate mortgages, deeds of trust, vendors' sales
agreements, land contracts, leaseholds, ground rents, real estate and any other interest
therein, options, negotiable instruments, trade acceptances, royalties, book accounts,
accounts payable, judgments, patents, trademarks or copyrights, insurance policies, safe
deposit boxes and their contents, annuities, pooling agreements, services of any nature
whatsoever, contracts of any nature whatsoever, and any other property, real, personal, or
mixed, tangible or intangible, or interest or interests therein, present, future, or
contingent.”).
24
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intangible, or interest or interests therein, present, future, or contingent.”54
Common sense agrees—everything from money, mortgages, and
merchandise to debts, debentures, and deeds is ownable.55 Even “contracts
of any nature whatsoever” and “services of any nature whatsoever” are
intangible things in which individuals or organizations may own rights.56
Even if these terms were not clear, canons of interpretation aid our
understanding. For starters, the noscitur a sociis canon instructs that
“particular words or phrases” should be understood “in relation to the
words or phrases surrounding them.”57 Applying that canon, “services,”
“contracts,” and “any other property” should be interpreted similarly to the
rest of OFAC’s laundry list of “property” examples—which are all things
that are capable of being owned. Ejusdem generis adds additional clarity:
“[W]hen a general term follows a specific one, the general term should be
understood as a reference to subjects akin to the one with specific
enumeration.”58 “Any other property” is a general term following a list of
specific ones, and thus, it should be construed—as should “any contracts”
_____________________
54
Id.
55
See id.
56
See, e.g., Lynch v. United States, 292 U.S. 571, 577 (1934); Commissioner v.
Covington,
120 F.2d 768, 771 (5th Cir. 1941) (Holmes, J., concurring).
57
United States v. Koutsostamatis, 956 F.3d 301, 307 n.2 (5th Cir. 2020); see also
United States v. Lauderdale Cnty., Mississippi,
914 F.3d 960, 966 (5th Cir. 2019) (“[W]e rely
on the principle of noscitur a sociis—a word is known by the company it keeps—to ‘avoid
ascribing to one word a meaning so broad that it is inconsistent with its accompanying
words, thus giving unintended breadth to the Acts of Congress.’” (citing Yates v. United
States,
574 U.S. 528, 543 (2015))); Antonin Scalia & Bryan A. Garner,
Reading Law: The Interpretation of Legal Texts 176–79 (2011).
58
Ali v. Fed. Bureau of Prisons, 552 U.S. 214, 223 (2008) (quoting Norfolk & Western
R. Co. v. Train Dispatchers,
499 U.S. 117, 129 (1991)); see also Scalia, supra note 57, at
180–90.
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and “any services”—as a reference akin to the lengthy list of exemplar,
ownable property.59
To evade this requirement of “ownership,” the Department conflates
a separate element of the statute, “interest,” with “property” to suggest that
“Tornado Cash profits from—and therefore has an interest in—the smart
contracts that embody the mixing service it provides” and are thus analogous
to patents and copyrights, which are undisputedly within the scope of
OFAC’s definition of property.60 But Tornado Cash smart contracts are
different from patents and copyrights in two important ways.
First, Tornado Cash doesn’t profit from the immutable smart
contracts at issue in this appeal. Some relayers and TORN token holders may
receive fees from using the mutable relayer-registry smart contracts, but not
from the immutable pool smart contracts. The Department has failed to
provide us with evidence that any foreign nationals chose to stake their
TORN and thus receive relayer fees. Nor does the record suggest that
Tornado Cash itself, which is the designated “entity,”61 receives fees from
transactions through either mutable or immutable contracts. And none of the
immutable smart contracts entitle the smart-contract creators to a benefit.
_____________________
59
See, e.g., Washington State Dept. of Social and Health Servs. v. Guardianship Estate
of Keffeler, 537 U.S. 371, 375 (2003) (finding “other legal process” was limited to legal
processes of the same nature as the specific items listed immediately preceding); Dolan v.
Postal Service,
546 U.S. 481, 486–89 (2006); United States v. Aguilar,
515 U.S. 593, 615
(1995) (Scalia, J., concurring in part and dissenting in part) (rejecting the applicability
of ejusdem generis to an omnibus clause that was “one of ... several distinct and independent
prohibitions” rather than “a general or collective term following a list of specific items to
which a particular statutory command is applicable”).
60
See 31 C.F.R. § 510.323 (“The terms property and property interest
include . . . patents, trademarks or copyrights . . .”).
61
We take no position on whether Tornado Cash qualifies as an “entity” under the
International Emergency Economic Powers Act.
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Second, patents and copyrights are ownable, just like everything else
in OFAC’s regulatory definition. Though they are intangible, someone owns
the right to the protections and benefits offered by patents and copyrights.62
The same cannot be said for these smart contracts. And, in any event, as the
Tornado Cash users note, this justification for the regulation was not
included in the Department’s evidentiary memorandum and thus may not be
used now.63
As a last resort, the Department emphasizes the final catch-all for
“any other property.” But the catch-all is not as expansive as the Department
suggests; it still requires that “any . . . property” actually be, well, property.
Adding an “any” before a word doesn’t change that word’s meaning.64
Because even OFAC’s regulatory definition requires that property be
ownable, the immutable smart contracts are beyond the scope of OFAC’s
blocking power.
2
OFAC’s definition of property includes “contracts of any nature
whatsoever,”65 but contrary to the Department’s argument (and the
_____________________
62
See, e.g., Matter of Imperial Petroleum Recovery Corp., 84 F.4th 264, 272–73 (5th
Cir. 2023) (referring to ownership of intangibles, including patents and intellectual
property); Polaris PowerLED Techs., L.L.C. v. Samsung Elecs. Am., Inc., No. 2:17-CV-00715-
JRG,
2019 WL 1399927, at *3 (E.D. Tex. Mar. 28, 2019) (referring to ownership of patent);
Goodman v. Lee,
78 F.3d 1007, 1012 (5th Cir. 1996) (referring to ownership of copyright).
63
See SEC v. Chenery Corp., 332 U.S. 194, 196 (1947).
64
See 50 U.S.C. § 1702(a)(1)(B); cf. Ali,
552 U.S. at 219 (“Read naturally, the word
‘any’ has an expansive meaning, that is, ‘one or some indiscriminately of whatever kind.’”
(quoting United States v. Gonzales,
520 U.S. 1, 5 (1997)).
65
31 C.F.R. § 510.323.
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misleading name of the software), the immutable smart contracts are not
contracts.
The Department contends—and the district court agreed—that the
immutable smart contracts “are merely a code-enabled species of unilateral
contracts,” and “Tornado Cash promoted and advertised the contracts and
its abilities and published the code with the intention of people using it—
hallmarks of a unilateral offer to provide services.” But in so finding, the
district court ignored basic principles of black-letter contract law: Unilateral
or not, contracts require “[a]n agreement between two or more parties.”66
Immutable smart contracts have only one party in play.
Compare mutable and immutable smart contracts. Mutable smart
contracts “could, at most, facilitate the creation of a contract between the
smart contract’s operator and a third party” through use of the smart
contract, “but the smart contract is not itself a contract.” For example, if a
mixer was mutable—or in other words, controllable or custodial—the
mixer’s operator or owner could offer to mix deposits, which a third-party
user could accept by transferring Ether to the operator’s mixer-smart
contract. The operator controlling the smart contract would use the mixer-smart contract to fulfill the contract by taking control of the third-party user’s
deposit, mixing the third-party user’s deposit with others in the pool, then
withdrawing the deposit to another account, as determined by the third-party
user. In that case, someone is always handling the Ether.
On the other hand, when choosing to use or interact with an immutable
smart contract, a third-party user could make an offer, but there is no smart-contract operator on the other side of the transaction to accept or make a
counteroffer—just software code. Because no one can control immutable
_____________________
66
Contract, Black’s Law Dictionary 404 (12th ed. 2024).
28
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smart contracts (or the Ether deposited in the pools), there is no party with
which to contract.
Furthermore, unilateral contracts can be revoked “at any time until
performance has been completed by the offeree.”67 Even assuming the
Tornado Cash developers made an offer by creating the smart contracts and
publicizing the code to be used for mixing and pooling, they revoked their
offer—and any role in it—by changing the code to be immutable, thus
running independently and autonomously. And regardless of whether
Tornado Cash advertises the immutable smart contracts on its website, that
does not change the simple fact that Tornado Cash does not—and cannot—
own or control them.
The district court analogized to a vending machine to find the
immutable smart contracts are unilateral contracts. But even if the immutable
smart contracts were, at some point, a “vending machine,” they are no
longer. For example, a vending machine has an owner—or counter-party—
who can exercise some control over it. He can update or remove inventory or
can unplug, move, or, if he so chose, destroy the vending machine. And the
vending machine’s owner can revoke the open offer to purchase snacks or
drinks at a set price (by turning off the vending machine). But here, Tornado
Cash has no control over these immutable smart contracts. It cannot change
the code, delete the code, or remove the code from the Ethereum blockchain
network. In other words, Tornado Cash cannot “unplug” the immutable
smart contracts. Even if Tornado Cash did not want North Korea, the
_____________________
67
Williston on Contracts § 5:15 (citing Restatement (Second) of Contracts § 45); see
also 1 Richard A. Lord, Williston on Contracts § 5:10 (4th ed. online) (last updated May
2023); Restatement (Second) of Contracts § 42 (1981) (stating that “[a]n offeree’s power of
acceptance is terminated when the offeree receives from the offeror a manifestation of an
intention not to enter into the proposed contract”).
29
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Lazarus Group, or anyone else, for that matter, using the immutable smart
contracts that the Tornado Cash developers created, Tornado Cash—let
alone the Department—would be powerless to stop them. Though there is a
potential argument that there were revocable offers prior to 2020—though
we see none—the offers were revoked permanently when the smart contracts
became immutable and the Tornado Cash developers removed any ability to
control or own those smart contracts.
The blockchain caselaw relied upon by the district court is not to the
contrary. Indeed, those cases accepted the allegations in the respective
complaints as true at the motion-to-dismiss stage,68 did not suggest the atissue smart contracts were immutable,69 and recognized that the smart
contracts which qualified as “contracts” involved multiple parties.70
The Department points to some state laws that have been passed to
ensure “[n]o contract relating to a transaction shall be denied legal effect,
validity, or enforceability solely because that contract is executed through a
_____________________
See Snyder v. STX Techs., Ltd., No. 19-6132 RJB, 2020 WL 5106721, at *2–3, 5
68
(W.D. Wash. Aug. 31, 2020).
69
See Williams v. Block one, No. 20-CV-2809 (LAK), 2022 WL 5294189, at *2 n.19
(S.D.N.Y. Aug. 15, 2022) (“Smart contracts ‘are programs that verify and enforce the
negotiation or performance of binary contracts’ and ‘thus are self-executing and selfenforcing, making the transactions more secure and less costly.’” (internal citation
omitted));
id. at *3.
70
See In re Bibox Grp. Holdings Ltd. Sec. Litig., 534 F. Supp. 3d 326, 330 (S.D.N.Y.
2021) (“A smart contract allows the parties to define the terms of their contract and submit
the crypto-assets contemplated in the contract to a secure destination. The smart contract
then automatically distributes the crypto-assets to the appropriate party upon the satisfaction
of the relevant conditions precedent defined in the smart contract.” (emphases added));
Rensel v. Centra Tech, Inc., No. 17-24500-CIV,
2018 WL 4410110, at *10 (S.D. Fla. June 14,
2018) (“Smart contracts are self-executing contracts with the terms of the agreement
between buyer and seller being directly written into lines of code.” (emphasis added)).
30
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smart contract.”71 But those laws seem to target automatic operation of a
contract (how smart contracts operate) between two willing parties through
software, rather than supposed “contracts” with a software. Indeed, those
laws do not recognize the difference between mutable smart contracts—in
which there is a party controlling the software, and thus, a party with which
to contract—and immutable smart contracts—in which there is no party with
which to contract.
Accordingly, the immutable smart contracts—regardless of their
misleading name—are not “contracts” under OFAC’s definition of
“property.”
3
The Department also contends that the immutable smart contracts
qualify as “services of any nature whatsoever.”72 But the immutable smart
contracts “provide . . . services”; they are not services themselves.
In the Department’s view, a service is “the performance of some
useful act or series of acts for the benefit of another, us[ually] for a fee.”73
But according to Black’s Law Dictionary, “[i]n this sense, service denotes an
intangible commodity in the form of human effort, such as labor, skill, or
advice.”74 No human effort is expended by the immutable smart contracts.
And even by the Department’s definition, the immutable smart contracts,
which are nothing more than lines of code, are less like a “service” and more
_____________________
71
Tenn. Code. Ann. § 47-10-202(c); see also, e.g., Ariz. Rev. Stat. Ann.
§ 44-7061 (similar).
72
See 31 C.F.R. § 510.323.
73
See Brief of Appellee at 24 (citing Service, Black’s Law Dictionary (11th
ed.)).
74
Service, Black’s Law Dictionary (12th ed.).
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like a tool that is used in performing a service.75 That is not the same as being a
service.
The software codes here—the twenty Tornado Cash addresses for
immutable smart contracts—are tools used in providing a service of pooling
and mixing the deposited Ether prior to withdrawal. Indeed, the immutable
smart contract provides a “service” only when an individual cryptocurrency
owner makes the relevant input and withdrawal from the smart contract; at
that point, and only at that point, the immutable smart contract mixes
deposits, provides the depositor a withdrawal key, and, when provided with
that key, sends the specified amount to the designated withdrawal account.
In short, the immutable smart contract begins working only when prompted
to do so by a deposit or entry of a key for withdrawal.
More importantly, Tornado Cash, as defined by OFAC, does not own
the services provided by the immutable smart contracts. A homeowner may
own the right to trash-removal services and a client may own the right to legal
services performed by a lawyer, but neither the homeowner nor the client
owns the person performing the trash-removal services or the lawyer—for
good reason. Similarly, Tornado Cash as an “entity” does not own the
immutable smart contracts, separate and apart from any rights or benefits of
the services performed by the immutable smart contracts.76
_____________________
75
A tool is “something (such as an instrument or apparatus) used in performing an
operation . . . .” Tool, Merriam-Webster, https://www.merriam-webster.com/dictionary/tool [https://perma.cc/M2Y5-L26L] (last accessed Sept. 19,
2024).
76
Ante, at 26–27. We take no position on whether Tornado Cash as an “entity,” as
defined by the Department, has an “interest” in the immutable smart contracts under the
International Emergency Economic Powers Act.
32
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No. 23-50669
Contrary to the Department’s arguments, the immutable smart
contracts are not services. So even when we consider OFAC’s regulatory
definitions, the immutable smart contracts are not property because they are
not ownable, not contracts, and not services.
V
“Our Constitution’s ingenious design demands that judges be
sticklers when it comes to decoding legislative text.”77 Because these
immutable smart contracts are not “property” under the word’s common,
ordinary meaning or under OFAC definitions, we hold that OFAC
exceeded its statutory authority. Accordingly, we need not address whether
Tornado Cash qualifies as an “entity” or whether it has an “interest” in the
immutable smart contracts.
We readily recognize the real-world downsides of certain
uncontrollable technology falling outside of OFAC’s sanctioning authority.
Presidential administrations are rightly concerned with malicious cyber-enabled activities, and IEEPA became law in 1977, years before the modern
Internet was even invented. But we must uphold the statutory bargain struck
(or mis-struck) by Congress, not tinker with it. “[T]he foremost task of legal
interpretation is divining what the law is, not what the judge-interpreter
wishes it to be.”78 IEEPA grants the President broad powers to regulate a
variety of economic transactions, but its language is not limitless. Mending a
statute’s blind spots or smoothing its disruptive effects falls outside our lane.
We decline the Department’s invitation to judicial lawmaking—revising
_____________________
77
Reed v. Taylor, 923 F.3d 411, 415 (5th 2019).
78
Id.
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Congress’s handiwork under the guise of interpreting it. Legislating is
Congress’s job—and Congress’s alone.79
Accordingly, we REVERSE and REMAND to the district court
with instructions to grant Van Loon’s partial motion for summary judgment
based on the Administrative Procedure Act.
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79
See, e.g., Epic Sys. Corp. v. Lewis, 584 U.S. 497, 511 (2018) (“[I]t’s the job of
Congress by legislation, not this Court by supposition, both to write the laws and to repeal
them.”); Gamble v. United States,
587 U.S. 678, 717 (2019) (J. Thomas, concurring)
(“The Constitution, federal statutes, and treaties are the law, and the systematic
development of the law is accomplished democratically. Our judicial task is modest: We
interpret and apply written law to the facts of particular cases.”).
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