4 - 6 minute read
Blockchain Association and DeFi Education Fund have filed an amicus brief in the United States District Court in Austin supporting the plaintiff’s motion for a partial summary judgment in the case brought by six individuals against the Treasury Department. The case was filed after the sanctioning of Tornado Cash by the Office of Foreign Assets Control (OFAC) which prohibited U.S. persons from interacting with addresses associated with the cryptocurrency mixer.
The plaintiffs in the case against the Treasury Department and associated parties argued that OFAC violated the Administrative Procedures Act by sanctioning an entity that was not liable for the sanctions. They also claimed that the OFAC’s actions deprived users of their right to free speech and their property (crypto tied up in the mixer) without due process.
In response, the Blockchain Association and DeFi Education Fund reiterated that Tornado Cash is software, not a person or property, and argued that it is an autonomous tool that serves an important function in preserving user privacy. They also emphasized that OFAC would typically sanction people committing illicit activities, not neutral tools used for those activities, such as Tornado Cash.
1/ Today, @BlockchainAssn and @fund_defi filed an amicus brief in Van Loon v. Treasury – fighting OFAC’s unlawful sanctions of the Tornado Cash software. OFAC’s decision raises serious regulatory and constitutional questions inhibiting the rights of many Americans.— Marisa Tashman Coppel (@MTCoppel) April 12, 2023
Blockchain Association CEO Kristin Smith remarked, “Ordinarily, OFAC would not consider sanctioning neutral tools used by some people for illicit activities, it would sanction the people committing those activities. The same perspective should apply to OFAC’s action against Tornado Cash.” This is a critical point, as much of the case against Tornado Cash seems to be based on the assumption that the mixer was used solely for illicit activities.
The amicus brief also brings up the major questions doctrine, which claims that OFAC’s sanctions are arbitrary and capricious. It also argues that OFAC’s actions would “be effecting a vast expansion of OFAC’s power” if allowed to stand.
The case against Tornado Cash raises questions about the government’s ability to interact with cryptocurrency projects. Traders should be aware of the potential regulatory actions that could affect the market. However, it is also important to note that Tornado Cash is not the only cryptocurrency mixer in existence, and if the OFAC’s actions are seen as arbitrary and capricious, it may not have a long-term effect on the market.
Traders should also keep an eye on the potential for future lawsuits against regulatory bodies, as the case against Tornado Cash is not the only one of its kind. These cases could have significant implications for cryptocurrency’s future relationship with the government.
The Legal Case Against Tornado Cash
The case against Tornado Cash revolves around the question of whether or not software, such as a cryptocurrency mixer, can be held liable for illicit activity that occurs using it. The plaintiffs argue that it is unfair to hold the mixer responsible for actions taken by its users. Meanwhile, the government maintains that the mixer was used to launder billions of dollars, including funds used by North Korean hackers.
The case against Tornado Cash is just one example of the ongoing battles between cryptocurrency and regulatory bodies. Traders need to be aware of these ongoing issues and the potential impact of new regulations on the market. While regulatory actions can cause short-term disruptions, they may not have long-term effects on the broader cryptocurrency ecosystem.
The Bottom Line
Traders should be aware of the ongoing legal battles between cryptocurrency and regulatory bodies. While regulatory actions can cause short-term disruptions, they may not have long-term effects on the broader cryptocurrency ecosystem. Traders should stay informed and aware of potential risks and opportunities when investing in cryptocurrency.