Coin Center may challenge US Treasury’s sanctions on Tornado Cash in court

Coin Center may challenge US Treasury's sanctions on Tornado Cash in court

Coin Center, a United States-based advocacy group for crypto policy, stated that it would “pursue administrative relief” for those affected by Tornado Cash sanctions imposed in part by the Treasury Department’s Office of Foreign Asset Control (or OFAC).

On Monday, Coin Center’s executive director Jerry Brito, and Peter Van Valkenburgh, the director of research, claimed that OFAC “overstepped” its legal authority when it added cryptocurrency mixer Tornado Cash to its Specially Designated Nationals (SDNs) list on August 8. They claimed Treasury’s actions could have violated U.S. residents’ constitutional rights to due process, free speech, and that they were looking into bringing the matter before a court.

Brito and Van Valkenburgh stated that autonomous code can be treated as a “person” OFAC, which is in excess of its statutory authority.

Analyse: What is and isn’t a sanctionable entity? Tornado Cash case By treating autonomous code as a “person” OFAC exceeds its statutory authority.
— Coin Center (@coincenter), August 15, 2022

According to the pair Coin Center will first contact OFAC to discuss the issue and also brief Congress members. This advocacy group will help Tornado Cash victims whose funds are stuck on 44 USD Coin (USDC), or Ether (ETH), addresses by applying for a license that allows them to withdraw their tokens. The organization will then begin to challenge the sanctions in court.

Brito and Van Valkenburgh claimed, “an entity that’s ultimately under control of certain persons” — which was the case with OFAC’s sanctions against in June — that Tornado Cash was not subject to sanctions. According to Coin Center executives this was due to the ETH addresses used for the mixer smart contracts:

Brito and Van Valkenburgh stated that the Tornado Cash Entity, who presumably deployed the Tornado Cash Application, had no control over it today. “Unlike Blender,” the Tornado Cash Entity cannot choose whether the Tornado Cash Application mixes or not. It also can’t decide which ‘customers to accept’ and which to reject.

They also added:

“While most OFAC actions limit expressive behavior (e.g. “While typical OFAC actions limit expressive conduct (e.g., donating money to an Islamic charity), this action sends the message that certain tools and software should not ever be used by Americans for legitimate purposes. Even if the listing is intended to stop North Korean hackers using Tornado Cash, and even though OFAC accepted the chilling effect of Americans using the tool for legitimate purposes in a collateral impact analysis it might not be sufficient to a court.

Similar: The Tornado Cash multisignature wallet for the community fund, Tornado Cash, is disbanded amid sanctions

Individuals associated with Tornado Cash reported being cut off from centralized platforms following the announcement of sanctions against Tornado Cash. Roman Semenov, Tornado Cash’s co-founder, reported that developer platform GitHub had suspended Roman Semenov’s account Monday. Users of the mixer’s autonomous decentralized organization and Discord channel claimed the two media were also blacked out.

Coin Center sued the U.S. Treasury in federal court in June. They claimed that the department had made an unconstitutional provision in the infrastructure bill signed by President Joe Biden in December 2021. According to the group, a provision of the law was intended to collect information on individuals involved in crypto transactions.

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