Crypto Policy Groups labels Tornado Cash sanctions  ‘unprecedented and unlawful’ 

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Key takeaways:

  • In a recent court filing, two Washington, D.C., crypto policy organisations criticised the Treasury Department’s penalties on Tornado Cash.
  • In an amicus brief, the Blockchain Association and DeFi Education Fund referred to last year’s sanctions as “illegal.”

The cryptocurrency community has been buzzing with discussions surrounding the recent sanctions imposed on Tornado Cash, a popular privacy-focused protocol. In a significant turn of events, crypto policy groups have come forward to criticize these sanctions, labeling them as “unprecedented and unlawful.” 

In the ongoing lawsuit against OFAC (Office of Foreign Assets Control), the Blockchain Association and the DeFi Education Fund joined forces by filing an amicus brief on June 2nd. The lawsuit was initiated to challenge the blacklisting of Tornado Cash, a cryptocurrency mixer.

In the brief, OFAC’s decision to sanction the mixer is harshly criticised. The department’s conduct, it continues, is “arbitrary and capricious” and beyond its legal powers.

Marisa Tashman Coppel, Policy Counsel for the Blockchain Association, provided additional commentary, stating that the Treasury and OFAC are not legally authorized to impose sanctions on software like Tornado Cash.

Coppel argued that OFAC’s jurisdiction is limited to sanctioning individuals and property. She clarified that Tornado Cash does not qualify as property since it is not owned by any entity. Even if Tornado Cash’s DAO (Decentralized Autonomous Organization) is considered a person, she maintained that Tornado Cash itself is entirely separate from its DAO and would exist independently of it.

Kristin Smith, CEO of the Blockchain Association, highlighted the significance of recognizing Tornado Cash as a tool in a statement. She emphasized that dismissing the tool solely based on its potential misuse by malicious individuals goes against the fundamental principles on which this country was built.

The association stated in its brief that many digital asset holders resort to privacy-protecting tools like Tornado Cash to avoid publicly exposing their financial activities. Such tools allow users to reclaim privacy, which is commonly expected in other contexts, while still benefiting from the advantages offered by blockchain technology.

Additionally, the association argued that Tornado Cash assists users in safeguarding themselves against bad actors, particularly in cases where a user’s transaction reveals their wealth.

The debate surrounding privacy in the cryptocurrency industry continues to evolve, highlighting the need for a thoughtful and balanced approach to regulation. However Tornado Cash consistently receives support from the community, recently leading cryptocurrency exchange Coinbase revealed that it would support a lawsuit against the US Treasury to have the restrictions on Tornado Cash’s cryptocurrency mixer lifted.

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Aadrika Sharma
Aadrika Sharma

I enjoy writing and try to learn new things every passing day!

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