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Recently the U.S. Treasury Department barred the use of a virtual currency mixer, Tornado Cash. Responding to the case, a group of Tornado Cash users is suing the Treasury over the decision to add the crypto mixer to the SDN list.
In a complaint filed with the US District Court, Western District of Texas, claims that Tornado’s sanction infringes on their rights and threatens their ability to engage in free and private financial transactions.
“As a result of the August 8 designation, no Ethereum users subject to US jurisdiction can lawfully use the Tornado Cash privacy protocol for any purpose without fear of serious consequences as a result of government enforcement. Plaintiffs and other law-abiding citizens are prohibited from depositing, withdrawing, sending or receiving funds through Tornado Cash even when the funds have no connection to illicit activity.”
Treasury secretary Janet Yellen and Office of Foreign Assets Control (OFAC) director Andrea Gacki are also named defendants in the case. Previously, Tom Emmer, Lawyer and Congressman also sent a letter to the Treasury questioning them about the case. The letter questioned the authorities about the grounds on which Tornado Cash is sanctioned, even when the defendant is not a person or an entity.
Later, an infamous crypto exchange, Coinbase said in a blog that they funded the lawsuit to challenge and remove the sanction. “As one of the largest companies in crypto, we have a responsibility to defend the crypto industry against actions that go too far and treat crypto on an uneven playing field. It’s not enough to just say we disagree and sit on the sidelines. That’s why we’re funding and supporting this lawsuit.”
Adding to this Paul Grewal, Chief Legal Officer at Coinbase said banning the virtual mixer will not really help. The Tornado barr may stop illicit transactions but it will also affect the legal fund flows.
“This legal challenge is about how OFAC exceeded the authority Congress and the President granted it in sanctioning open source technology, rather than sanctioning the bad actors who used it or the property of those bad actors.
The sanctions against this open source software have not only blocked its use by US persons, but cryptographers and developers have also been scared away from contributing to other important privacy projects, fearful that their code will be sanctioned in the future.”
Nancy J. Allen is a crypto enthusiast, with a major in macroeconomics and minor in business statistics. She believes that cryptocurrencies inspire people to be their own banks, and step aside from traditional monetary exchange systems. She is also intrigued by blockchain technology and its functioning. She frequently researches, and posts content on the top altcoins, their theoretical working principles and technical price predictions.
