The Blockchain Association puts in the cards in the Tornado Cash case
Crypto advocacy groups Blockchain Association and the DeFi Education Fund filed a lawsuit in US District Court in Austin in the case brought by six individuals against the US Treasury Department for sanctioning Tornado Cash. Amicus (friend of the court) brief supports plaintiff’s motion for partial summary judgment.
The agency accused Tornado Cash of laundering more than $7 billion, including hundreds of millions for the Lazarus Group of North Korean hackers. The designation makes it illegal for US persons to interact with these addresses, under threat of large fines and imprisonment.
The plaintiffs argued that OFAC violated the Administrative Procedures Act by sanctioning an entity that was not responsible for its sanction, violating users’ right to free speech and deprivation of property (crypto tied up in the mixer) without due process. The plaintiffs filed a motion for partial summary judgment on the APA violation and free speech counts on April 5.
Related: Tornado Cash developer says crypto mixer ‘sequel’ aims to be regulator-friendly
In their brief, the Blockchain Association and the 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 to preserve users’ privacy. Blockchain Association CEO Kristin Smith added in a statement:
“Ordinarily, OFAC would not consider sanctioning neutral tools used by some people for illegal activities, it would sanction people who commit those activities. The same perspective should apply to OFAC’s action against Tornado Cash.”
The brief expanded on the legal arguments already presented. It introduced the principal issue doctrine into the discussion of OFAC’s authority, for example, stating:
“OFAC’s sanctions are ‘not in accordance with the law’ for yet another reason: the sanctions are arbitrary and capricious.”
It argued that if the sanction is upheld, it would “effect a vast expansion of OFAC’s power.”
Crypto think tank Coin Center sued the same parties over Tornado Cash’s sanctioning in October. Tornado Cash creator Alexy Pertsev was arrested in the Netherlands several days after the first OFAC Tornado Cash designation. He is accused of money laundering.
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