Crypto Stakeholders Sues U.S. Treasury Department for Tornado Cash Sanction

A sect of investors and crypto engineers have joined forces together to press charges against the United States Department of Treasury over the sanction issued to cryptocurrency mixer, Tornado Cash. 

Their argument was that the Treasury department overstepped the limit of its authority in trying to blacklist the crypto mixer and in turn preventing the interaction of American entities with Tornado Cash.

Tornado cash is a crypto mixer or crypto tumbler used by digital assets enthusiasts to combine digital currencies from several sources to later distribute them with their original source unknown. 

Legitimate crypto players use this tool to obfuscate the source of their assets so as to attain anonymity and privacy. Meanwhile, bad actors utilize the crypto tool to distribute their loot from hacks and a series of cyber theft.

U.S Treasury Department Sanctions Tornado Cash

Recently, Tornado Cash has been under the radar of the U.S. authorities for assisting many scammers in actualizing major crypto heists. 

The Office of Foreign Assets Control (OFAC) under the Treasury Department recently sanctioned the crypto mixer for its involvement in the laundering of about $7 billion. Consequently, 29 years old Alexey Pertsev, the protocol’s core software developer was arrested by the Dutch authorities in Amsterdam in connection with the money laundering scheme. 

After Alexey’s arrest, some entities like Canadian businessman Kevin O’Leary endorsed the action. 

Conversely, many oppositions rose against the authorities for the same act. Non-profit advocacy group Coin Center called the sanction action of OFAC ‘unconstitutional’ and planned to sue the regulator. In Coin Center’s argument, smart contracts cannot be sanctioned as this will set wrong and dangerous standards for coders globally.

Together, some of these Tornado Cash supporters have filed a lawsuit at a federal court in the Western District of Texas. 

Interestingly, American cryptocurrency exchange Coinbase is in charge of funding the lawsuit. Coinbase’s chief legal officer, Paul Grewal, regards the U.S Treasury Department sanction as one which sets a dangerous precedent.