Key Takeaways
- The six plaintiffs which include Coinbase employees are suing the U.S. treasury Department for blacklisting Torando Cash.
- Coinbase CEO Brian Armstrong said the Treasury Department had gone too far “by sanctioning an entire technology instead of specific individuals.”
Leading crypto exchange platform Coinbase on Thursday announced that it was funding a lawsuit filed against the U.S. Treasury Department to block sanctions barring Americans from the virtual currency mixer- Tornado Cash.
Treasury sanctioned Ethereum-based Tornado Cash last month for allegedly helping to launder over $7 Billion.
Commenting on the sanctions, Coinbase CEO Brian Armstrong said that the Treasury Department had gone too far “by sanctioning an entire technology instead of specific individuals.”
“There are legitimate applications for this type of technology, and as a result of these sanctions, many innocent users now have their funds trapped and have lost access to a critical privacy tool.”
The six plaintiffs suing the U.S. treasury Department for blacklisting Torando Cash include Coinbase employees Tyler Almeida and Nate Welch, Prysmatic Labs co-founder Preston Van Loon, GridPlus engineer Kevin Vitale, Ethereum proponent, and angel investor Alexander Fisher and former Amazon engineer Joseph Van Loon.
The plaintiffs allege that the Treasury Department’s Office of Foreign Assets Control (OFAC) did not have the legal right to designate Tornado Cash, which the suit refers to as “a decentralized, open-source software project that restores some privacy for Ethereum users,” as a sanctioned entity because it is not an entity, person or organization.
Coinbase, which is funding the lawsuit, in its blog post, stated that “sanctioning open source software is like permanently shutting down a highway because robbers used it to flee a crime scene.”
The plaintiffs further argue the blacklisting caused financial harm as their money is still locked on Tornado Cash and hurt users relying on the tools for privacy reasons.
The six people suing U.S. treasury Departments want the court to ask the U.S. treasury to remove Tornado Cash smart contracts from the U.S. sanctions list.
The suit further claims that each of the plaintiffs has some ether locked in Tornado Cash, which they used for various legal purposes– including donating to the Ukraine war and protecting their private wallets from being traceable to their public online identities– but can no longer access owing to OFAC’s sanctions,
Apart from the U.S. treasury, the plaintiffs are also suing Treasury Secretary Janet Yellen and OFAC Director Andrea Gacki. The sanctioning of Torandao Cash has triggered debates and discussions on the need for financial privacy in the Web3 space.
The fact that OFAC has sanctioned the code running the Tornado Cash application rather than sanctioning individuals/entities using the tool for crime has also sparked criticism in the crypto community.
