Coinbase Employees Challenge U.S. Treasury: A Legal Battle Over Tornado Cash Sanctions
The Tornado Cash Controversy
In August last year, the U.S. Treasury’s Office of Foreign Assets Control (OFAC) sanctioned the coin mixing protocol Tornado Cash, alleging involvement in laundering billions in cryptocurrency. This decision sparked a wave of support and debate within the crypto community and industry leaders.
Coinbase Employees Step Up for Legal Challenge
Recently, legal documents reveal that six Coinbase employees — Joseph Van Loon, Tyler Almeida, Alexander Fisher, Preston Van Loon, Kevin Vitale, and Nate Welch — have taken a significant step. They filed a motion with the U.S. Federal Fifth Circuit Court of Appeals to reassess the sanctioning of Tornado Cash by the U.S. Treasury.
Legal Grounds for the Appeal
Coinbase’s Chief Legal Officer, Paul Grewal, explained on Twitter the reasons behind this legal action. The U.S. Treasury is accused of overstepping its authority by labeling holders of the Tornado Cash governance token TORN as members of an “entity,” thus sanctionable as “individuals.” Furthermore, Grewal criticizes the Treasury’s claim that immutable open-source software now counts as “property,” which contradicts the definition that property must be ownable.
Previous Legal Efforts and Setbacks
In April, the same group of Coinbase employees had filed a motion in a Texas district court, arguing that the Treasury’s sanctions exceeded its statutory authority and that prohibiting transactions with smart contracts and open-source code violates the First Amendment. However, their efforts faced a setback when the court dismissed the motion in August, recognizing Tornado Cash as an association subject to OFAC sanctions.
Coin Center’s Failed Legal Aid to Tornado Cash
Notably, the crypto advocacy group Coin Center had also suffered a legal defeat in their support for Tornado Cash. In October, they filed a lawsuit against OFAC, alleging that the sanctions were unprecedented and illegal. However, the U.S. District Court for the Northern District of Florida rejected this lawsuit, ruling that the existence of DAO and TORN provided sufficient evidence for Tornado Cash to be considered an entity subject to sanctions. Coin Center plans to appeal this decision.
Conclusion:
The legal battle over Tornado Cash’s sanctions by the U.S. Treasury is a pivotal moment for the cryptocurrency industry. It raises crucial questions about the limits of governmental authority, the nature of decentralized technologies, and the right to financial privacy. The crypto community keenly awaits the outcome of the Fifth Circuit Court’s review.
Keywords: Coinbase, Tornado Cash, U.S. Treasury, OFAC Sanctions, Cryptocurrency Sanctions, Legal Challenge, Blockchain Privacy, Decentralized Finance, Crypto Advocacy, Government Regulation in Crypto
