The U.S. is being sued by a number of Tornado Cash customers over the Treasury Department’s choice to include the cryptocurrency mixer on the list of SDNs and Blocked Persons (SDNs).
Their grievance submitted to the U.S. Plaintiffs in the Western District of Texas District Court assert that Tornado Cash’s punishment violates their rights and jeopardizes their capacity to conduct free and private financial transactions.
As a result of the August 8 categorization, no Ethereum users located in the US are permitted to use the Tornado Cash privacy protocol without risking severe repercussions from government enforcement. Plaintiffs and other law-abiding persons are not permitted to send or receive money through Tornado Cash.
The action also names the director of the Office of Foreign Assets Control (OFAC), Andrea Gacki, and Treasury Secretary Janet Yellen as defendants. In a letter to Yellen written last month, Congressman Tom Emmer of Minnesota questioned the legality of punishing Tornado Cash, which is not a person, piece of property, or other legal entity.
Bitcoin exchange, Coinbase claims to have sponsored the legal action to contest and overturn the penalty.
“As one of the biggest organizations in the cryptocurrency space, we have a duty to defend the sector from acts that go too far and treat it unfairly. Simply stating that we disagree and remaining neutral is insufficient. We are funding and supporting this lawsuit because of this,” it stated.
Paul Grewal, chief legal officer at Coinbase, claims that the prohibition of Tornado Cash has consequences for everyone.
This legal challenge is being made because OFAC sanctioned open-source technology rather than the bad actors who exploited it or their property, as Congress and the President had authorized.
Not only have the sanctions against this open-source software prevented US citizens from using it, but they have also discouraged cryptographers and developers from working on other crucial privacy projects for fear that their code would also be sanctioned in the future
