Crypto policy non-profit Coin Center today announced it is preparing to challenge the U.S. government’s Tornado Cash ban in court.
The Washington, D.C.-based advocacy group said Monday that the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) overstepped its bounds when it blacklisted Tornado Cash last week, potentially violating constitutional rights.
The OFAC sanctioned Ethereum mixing app Tornado Cash on August 8 by adding it to its Specially Designated Nationals list, claiming that criminal groups had used Tornado Cash “to launder more than $7 billion worth of virtual currency since its creation in 2019.” (According to blockchain sleuthing firm Elliptic, however, only $1.5 billion of illicit funds had been moved through Tornado Cash while the rest represented legitimate use of the service.)
We believe OFAC has exceeded its statutory authority by sanctioning the Tornado Cash smart contract.
— Neeraj K. Agrawal (@NeerajKA) August 15, 2022
“As we suspected, 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,” Coin Center’s executive director Jerry Brito and research director Peter Van Valkenburgh said in a blog post.
“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,” Brito and Valkenburgh wrote.
Tornado Cash is an app that works to obscure Ethereum transactions—making it a go-to tool for Ethereum traders and users concerned about privacy.
But the U.S. government said those behind the app had “repeatedly failed to impose effective controls designed to stop it from laundering funds for malicious cyber actors on a regular basis and without basic measures to address its risks.”
Now, those who interact with it—including by receiving money from an address that has used the app—will potentially be breaking the law.
Coin Center is arguing that the ban and its implications are unjust, and today further clarified its position by contrasting the blacklisting of Tornado Cash with the Blender.io ban. Blender.io is another coin mixing app that was also sanctioned by the feds in May. Coin Center said this ban made sense because Blender.io “is a company or some like entity.”
Tornado Cash, however, is a decentralized, open-source app that anyone can contribute to; there is no one person controlling it, unlike with Blender.io. “The Tornado Cash Entity, which presumably deployed the Tornado Cash Application, has zero control over the Application today,” the blog post added.
“Unlike Blender, the Tornado Cash Entity can’t choose whether the Tornado Cash Application engages in mixing or not, and it can’t choose which ‘customers’ to take and which to reject.”