The leading crypto exchange, Coinbase, declared support in a legal battle against the United States Treasury to revoke the ban on crypto mixer Tornado Cash.
On April 5th, a request was made in a Texas District Court by the plaintiffs who are supported by Coinbase. They requested that the U.S. Office of Foreign Asset Control (OFAC) settle for the first two counts of their original complaint filed in September 2022. This request is known as a motion for a partial summary judgment.
If the motion for a partial summary judgment is approved, the judge will make a ruling on some facts of the case but not all of them, which will be left for trial.
The two counts claimed that OFAC broke the law by going beyond its powers under the International Emergency Economic Powers Act (IEEPA) and violated the right to free speech under the First Amendment of the U.S. Constitution.
The plaintiffs put two claims. Firstly, they claimed that OFAC violated a section of the IEEPA that permits the Treasury to take action against the property in which a foreign country or nation has an interest. The motion argued that the provision is only applied to foreign “nationals” or “persons” and, hence, does not apply to open-source software.
To support this claim, the plaintiffs argued that the 20 or so smart contracts that enable Tornado Cash’s functions should not be considered property under IEEPA because they cannot be owned.
The second main point presented is that OFAC’s ban on the open-source code goes against the right to free speech under the First Amendment of the U.S. Constitution.
The plaintiffs argued that while OFAC has the power to take action against groups like North Korea’s Lazarus Group, a complete ban on Tornado Cash is excessive, as money laundering accounted for only a small fraction of crypto transactions in 2021. They compared this to banning the printing press because a small group of users might publish instructions on building a nuclear weapon.
The plaintiffs’ aim with this motion is to restore internet privacy rights for U.S. citizens, and it is the latest development since they first sued the U.S. Department of Treasury in September. The six plaintiffs involved in the case had previously interacted with Tornado Cash.
The creator of Tornado Cash, Alexey Pertsev, is also facing legal troubles in the Netherlands, where he has been detained since August 18 on money laundering charges.
Also Read: U.S. Treasury “Redesignates” Tornado Cash as a Sanctioned Entity
