Crypto lobbyists still fighting to axe ‘unlawful’ Tornado Cash sanctions

The Blockchain Association and the DeFi Education Fund have become the latest industry advocates to file their support of Coin Center’s lawsuit against the United States Treasury over its “unlawful” sanctions aga Tornado Cash.

On June 2, the two cryptocurrency industry advocacy groups filed a joint amicus brief in support of Coin Center, arguing that the U.S. sanctions against the crypto mixer Tornado Cash should be dropped.

1/ Today, my colleagues and I at @BlockchainAssn and our partners at @fund_defi filed an amicus brief in support of @coincenter‘s lawsuit against OFAC fighting against sanctions of the Tornado Cash software protocol.

https://t.co/mSZW7nVDOb pic.twitter.com/Y4CxjJtBrq

— Marisa Tashman Coppel (@MTCoppel) June 2, 2023

They called the sanctions imposed by the Treasury’s Office of Foreign Assets Control (OFAC) “both unprecedented and unlawful,” and added:

“OFAC’s sanctions are unlawful. OFAC lacks statutory authority to sanction software like Tornado Cash, and regardless, its decision lacks any factual predicate that could render the sanctions lawful.”

The associations argued Tornado Cash is software and while OFAC has the legal authority to sanction people or property, it cannot sanction a decentralized protocol.

“The core Tornado Cash software is not and cannot be owned by anyone,” they argued and claimed OFAC “conjured” up a “person” so it had a basis to sanction the crypto mixer.

5/ By sanctioning the Tornado Cash software protocol, OFAC infringes on the right to free speech and due process.

Americans who wish to engage in anonymous speech or association can no longer do so.

Nor did they have notice when they were blocked from accessing their assets.

— Marisa Tashman Coppel (@MTCoppel) June 2, 2023

The brief admitted there was malicious use of the protocol for money laundering, mostly by North Korean-affiliated hackers, but also pointed to the other less nefarious uses — namely to enhance privacy on the publicly viewable Ethereum blockchain.

The groups argued the sanctions should be declared unlawful and the enforcement of them should be legally prohibited by the courts.

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In April, the two groups similarly filed an amicus brief in support of a nearly identical lawsuit brought by six individuals against the Treasury Department over its Tornado Cash sanctions.

The lawsuit, filed in September is backed by the crypto exchange Coinbase who is similarly wanting to remove the ban on the mixer.

The Treasury, however, claimed such crypto mixers are a national security threat and Tornado Cash repeatedly failed to create controls to stop money laundering.

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