News that Tornado Cash was sanctioned The crypto community was taken aback by actions from the U.S. Treasury's Office of Foreign Assets Control (OFAC). The ban followed allegations This open-source cryptocurrency mixing service was accused of facilitating money laundering for hackers linked to a notorious North Korean cyber crime group.
A Brief Reminder
Following OFAC's decision, reactions have been varied. Arrests of Tornado Cash's developer led to demonstrations last month.
On September 8, dissension climaxed as six Tornado Cash users filed a lawsuit against the Treasury in a Texas federal court, including a Coinbase employee.
Their lawsuit aims to overturn the sanctions, but notably, it underscores a broader objective: securing privacy rights.
Privacy’s Defender
In a statement made on Coinbase’s In his blog post, Armstrong outlined his reasoning, expressing concern for users whose assets are inaccessible due to the sanction.
Beyond freezing assets, the sanction restricts access to a crucial privacy tool, Tornado Cash, which is vital for maintaining transaction confidentiality.
As per the blog, the U.S. Treasury's actions are seen as overreach. 'OFAC didn't focus on the perpetrators but instead sanctioned an open-source tool commonly utilized by innocent individuals.'
In a CNBC discussion, Coinbase's Chief Legal Officer, Paul Grewal, emphasized the broader issue — legal constraints on technology itself.
The litigation involving the U.S. Treasury and Tornado Cash stands as a landmark case in the cryptocurrency sector, drawing significant attention from industry leaders.
Coinbase has made it clear that it intends to follow regulatory guidance while striving for the lifting of these sanctions, shared by Tornado Cash users.
Figures such as Vitalik Buterin have used Tornado Cash to safeguard anonymity, highlighting the plaintiffs' argument for the right to engage in lawful activities in private.
Aligning with these principles, Coinbase is participating in the legal process to uphold its employees' rights and broader freedoms in the cryptocurrency realm.
Cryptocurrency, being an emerging field, requires support, but Grewal argues that these sanctions inject fear and uncertainty, stifling innovation.
The constant tension between cryptocurrency leaders and government regulators persists, navigating complex issues from money laundering to privacy rights.
The US is Playing Ball
Adding Tornado Cash to OFAC’s Specially Designated Nationals List — typically reserved for serious international threats — has drawn criticism as potentially unlawful.
The plaintiffs argue their case with three major points: Tornado Cash doesn't qualify for the SDN List, it breaches First Amendment rights, and it unlawfully holds users' funds.
