Coin Center To Challenge Sanctions On Tornado Cash In Court

Coin Center to challenge sanctions on Tornado Cash in court, and to pursue legal remedies for all parties affected by the penalties, stated the aforementioned crypto policy advocacy group.

By adding cryptocurrency mixer Tornado Cash and 44 linked wallet addresses to its list of Specially Designated Nationals (SDNs) on August 8, according to Coin Center’s executive director Jerry Brito and director of research Peter Van Valkenburgh, OFAC “overstepped its legal jurisdiction.”

Coin Center To Challenge Sanctions On Tornado Cash In Court

The directors were considering taking the case to court on the grounds that the Treasury’s actions may have potentially violated the constitutional rights to due process and free expression of Americans.

“By treating autonomous code as a ‘person’ OFAC exceeds its statutory authority,” Brito and Van Valkenburgh stated.

Analysis: What is and what is not a sanctionable entity in the Tornado Cash case.

By treating autonomous code as a “person” OFAC exceeds its statutory authority.https://t.co/kDjoumAhF1

— Coin Center (@coincenter) August 15, 2022

The two assert that Coin Center would brief lawmakers in addition to initially discussing the issue with OFAC in order to remedy it. The advocacy group will then help anyone who has money stranded on any of the 44 USD Coin (USDC) and Ether (ETH) addresses connected to Tornado Cash by asking for authorization to withdraw their tokens. Following these actions, the organization will begin investigating legal alternatives for challenging the punishment.

It can’t be asserted that Tornado Cash is a person subject to sanctions, contrary to OFAC’s penalties against cryptocurrency mixer Blender.io in May, which were imposed on an entity that is ultimately under the control of specific people and better match the criteria of SDNs.

Officials at the Coin Center claimed that this was caused by the ETH addresses of the mixer smart contract:

“The Tornado Cash Entity, which presumably deployed the Tornado Cash Application, has zero control over the Application today,” said Brito and Van Valkenburgh. “Unlike Blender, the Tornado Cash Entity can’t choose whether the Tornado Cash Application engages in mixing or not, and it can’t choose which ‘customers’ to take and which to reject.”

They also added:

“While typical OFAC actions merely limit expressive conduct (e.g. donating money to a particular Islamic charity), this action sends a signal — indeed seems to have been intended to send a signal — that a certain class of tools and software should not be used by Americans even for entirely legitimate purposes. Even if this listing is truly and exclusively aimed at stopping North Korean hackers from using Tornado Cash, and even if the chilling effect on the use of the tool by Americans for legitimate reasons was acceptable to OFAC in a collateral impact analysis, it may not be sufficient to a court.”