Coincenter is mulling a lawsuit against the Office of Foreign Assets Control (OFAC) for actions against Tornado Cash.
Covered:
- Coincenter Considering Lawsuit Against US Treasury
- What This Means For Tornado Cash
Coincenter Considering Lawsuit Against US Treasury
Crypto lobbying group Coincenter is considering a lawsuit against OFAC, a department of the US Treasury, thanks to its Tornado Cash sanctions. Last week, the US Treasury announced that it’s sanctioning crypto addresses associated with the Ethereum-based mixing service.
“…we believe that OFAC has overstepped its legal authority by adding certain Tornado Cash smart contract addresses to the SDN List, that this action potentially violates constitutional rights to due process and free speech, and that OFAC has not adequately acted to mitigate the foreseeable impact its action would have on innocent Americans,” said Jerry Brito of Coincenter via their blog.
Brito also added, “We intend to work with other digital rights advocates to pursue administrative relief. We are also now exploring bringing a challenge to this action in court.”
Most importantly, and most interestingly, Brito draws a distinction between Tornado Cash and another mixing service sanctioned by the treasury, Blender.io. “When you send funds to an address provided by Blender, the persons who run Blender take control of those coins. They then mix your coins with those of other customers and send an equivalent amount back to you minus a fee,” Brito said.
In sum, Brito believes Tornado Cash should be exempt because it’s fully decentralized, rather than a service that takes crypto into custody and then provides a service. As Brito also points out, the crypto community did not object to Blender being sanctioned to the same degree. Moreover, Brito added that as an entity Blender can also represent itself against the claims.
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Coincenter: What This Means For Tornado Cash
It’s unlikely that anything comes of this lawsuit, even if filed. At best, it becomes a money suck for lawfirms. In both cases, there’s a lot of money that can be thrown towards legal bills. Meaning, any lawsuit would takeforever to resolve. See: SEC v. Ripple.
In terms of any potential favorable judgment, it would likely require a sympathetic judge. Those would be hard to come by in this case, thanks to Tornado Cash’s association with foreign adversaries like North Korean hackers.
In addition, the decentralized nature to Tornado Cash means it can’t claim to be some “move fast, break things” like entity that begs for forgiveness during a senate hearing. There’s no real entrepenurial motive for any judge to latch on to.
Furthermore, even Brito isn’t sure Tornado Cash isn’t an entity itself. After all, Tornado Cash did raise money and there was some association between a group of individuals that together brought Tornado Cash to fruition. “If those people have done nothing beyond author mixing software now found on the Ethereum blockchain then they may have a strong First Amendment defense; we just don’t know all the facts yet.”
All in all, it doesn’t appear Coincenter would have a particularly strong case. Nor is it the greatest hill to die on considering the current climate. In particular, the US government has shown a willingness to work with crypto companies to some extent. Trying to sue them for sanctioning addresses associated with North Korean hackers won’t help. Especially with some US senators breathing down crypto’s neck.
Of course, this brings up valid privacy concerns. Not to mention, exisential questions. But it’s not a bad idea to consider Satoshi’s belief that Bitcoin should be transparent.
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