U.S. Facing Lawsuit Over Decision to Sanction Tornado Cash
Ethereum

U.S. Facing Lawsuit Over Decision to Sanction Tornado Cash

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Created 3mo ago, last updated 3mo ago

Coin Center has accused the Treasury of making it a crime to use the coin mixing service, which has been used by North Korea to launder stolen cryptocurrencies.

U.S. Facing Lawsuit Over Decision to Sanction Tornado Cash

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A crypto-focused nonprofit has announced that it's suing the U.S. Office of Foreign Assets Control over its decision to sanction Tornado Cash.

Coin Center has accused the Treasury of making it a crime to use the coin mixing service, which has been used by North Korea to launder stolen cryptocurrencies.

Setting out its argument, the organization said Tornado Cash is crucial for maintaining privacy — and affording Ethereum users the same rights as salaried employees or charitable donors in the traditional fiat world.

"Privacy is not the default on Ethereum. If you do your job on Ethereum, your co-workers can see your salary. If you donate to a political cause on Ethereum, the enemies of your cause can see your contribution. If you are a celebrity on Ethereum, your fans see not just your publicized activities but also your private personal accounts."

In a lawsuit, Coin Center argues that the Treasury has "very specific powers" that enable the government to stop American people from transacting with sanctioned individuals, entities and their property — but applying this to Tornado Cash is wrong.

"When we or our co-plaintiffs use the Tornado Cash tools, we do so as normal, privacy seeking Americans. We do not engage in any transactions with any foreign person or entity or their property. Instead, we are using immutable and widely available software on the Ethereum blockchain to move our own valuables from one place in cyberspace that is fully under our control to another place that we also control."

Coin Center also claims that the sanctions have meant Americans have had their funds trapped in a smart contract without any due process — and they are now saddled with "indefinite reporting requirements or else criminal penalties through no fault of their own."

The lawsuit goes on to argue that this will mean once-private donations to political causes now need to be made public on the blockchain — and one of the co-plaintiffs in the case had used Tornado Cash to make a contribution to Ukraine.

"Subjecting these transactions to public scrutiny would not only chill the protected activities of donors, it would put those donors and activists in real danger of Russian reprisals."
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