Washington, D.C.-based policy nonprofit Coin Center is suing the Treasury Department over its sanctioning of Tornado Cash, the open source software that can be used to anonymize transactions on the Ethereum blockchain.
Treasury’s August sanctioning of the transaction mixer, “exceeded their statutory authority because Tornado Cash is used to complete functions that do not include 'any property in which any foreign country or a national thereof has any interest,'” the co-plaintiffs argue in their brief. Joining Coin Center on the suit are an anonymous human rights advocate based in the Southeastern United States, a software developer who used the Ethereum blockchain, and David Hoffman, a digital asset manager.
The lawsuit is the second against the Treasury Department over the sanctioning. U.S. crypto giant Coinbase is backing a lawsuit filed last month by six individuals who used the software, including two Coinbase employees.
Challenges to Treasury’s sanctioning of the software could be landmark cases for blockchains. The nonprofit and Coinbase-backed lawsuits seek to convince the court that the government overstepped its authority in targeting software, rather than an individual or entity, as well as overstepping the statutory language and intent giving Treasury the power to issue economic sanctions.
“Americans use Tornado Cash unilaterally to protect their own property,” the suit continues. Treasury’s “defiance of this statutory element assumes an authority that would give them virtually unlimited control to regulate the American economy.”
The plaintiffs also state that the mixer is necessary to protect their right to privacy.
“If a user doesn’t take proactive steps to protect his privacy, the ledger’s transparency allows strangers to track his private associations and stalk his intimate relations,” Coin Center and the other plaintiffs assert. “It invites publicization of and retaliation for his private contributions to unpopular causes. And it allows anyone to see whether he has a lot of assets, which would put a target on his back.”
The suit has been filed with the U.S. District Court for the Northern District of Florida.
© 2023 The Block. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.