The Blockchain Association has filed an amicus brief in an ongoing lawsuit by think tank Coin Center against the Treasury Department and its sanctions watchdog, the Office of Foreign Asset Control.
In the suit, filed last October, Coin Center has alleged that the U.S. Treasury Department’s sweeping sanctions against crypto mixer Tornado Cash harmed Americans and their ability to transact privately using the Ethereum network.
“It’s critical to recognize that Tornado Cash is simply a tool – punishing the tool itself simply because it can be used by anyone, including bad actors, runs contrary to the values this country was founded upon,” Blockchain Association CEO Kristin Smith said in a statement. “Blockchain Association stands with Coin Center, advocating for the responsible and lawful use of blockchain technology. Regulatory actions should only be targeted at bad actors who abuse this tool for illegal purposes.”
The suit was the second that the advocacy group filed against the Treasury Department, and the second lawsuit against Treasury over its Tornado Cash sanctions.
OFAC sanctioned Tornado Cash last August, saying that North Korean hackers had laundered hundreds of millions of dollars’ worth of crypto through the mixer since its launch. Approximately 20% of Tornado Cash’s overall transaction volume was tied to one hack or another, the federal government alleged.
The crypto industry has vigorously opposed the move, highlighting that OFAC does not normally sanction software and that Tornado Cash does not have a central operator.
There are legitimate uses for individuals to use privacy-enhancing tools like Tornado Cash, the suit claimed, and OFAC’s sanctions against the privacy mixer – which works by pooling funds to obfuscate the sender of any given transaction – mean that these individuals now effectively expose their entire transaction history to anyone looking at the network data.
“An order effectively requiring Defendants to decriminalize use of the 20 Tornado Cash addresses would allow Plaintiffs to conduct their legitimate activities with some measure of anonymity, use their preferred software tool without fear of penalties, and engage in important expressive associations,” the suit said. “Judicial relief would also serve the public interest by averting harm to Tornado Cash users who are United States persons, to Ethereum as a freedom and privacy enhancing technology, and to the important sector of the economy that depends on Ethereum.”