The Tornado Cash case is becoming a symbol of the fight for individual freedom in the United States. The citizens’ resistance is getting organized in the face of the Treasury Department’s sanctions and the plaintiffs will be able to count on a strong support: the giant Coinbase. Brian Armstrong’s teams are planning to deploy their legal firepower to support the legal action of several Tornado Cash users who feel they have been unfairly targeted. A judicial chronicle of a procedure that could become a model in the Land of the Free.
Tornado Cash users sue the US administration
It’s official as of yesterday, at least six users of the cryptocurrency shuffler Tornado Cash have filed a lawsuit in U.S. District Court for the Western District of Texas. The cause? The recent addition of 44 smart contract addresses from Tornado Cash to the U.S. Treasury Department’s blacklist. This special list, the SDN List, normally targets terrorists, international criminals or high ranking officials from embargoed countries and is managed by the Office of Foreign Assets Control (OFAC). But some believe that this procedure is abusive and that it “does not comply with the law”.
The plaintiffs are seeking to have this measure rescinded on the basis of three legal arguments:
- Tornado Cash does not meet the definition of what qualifies for listing on the SDN List as “property or property, a foreign country or a national thereof.
- The procedure violates the First Amendment of the Constitution on freedom of speech (in this case it is “donations to support important and potentially controversial political and social causes”)
- The current blocking of funds held on Tornado Cash is not legal under U.S. law
And among the six defendants is a Coinbase employee who allegedly used Tornado Cash to make donations to Ukraine anonymously.
Coinbase supports them in the name of privacy
Just like Vitalik Buterin before him, many people have taken advantage of the services of the blender to protect their identity, their family or that of the people they support. In this regard, the document filed in court yesterday states that each plaintiff is “an American who simply wants to engage in an entirely legal activity in private”. Coinbase has therefore decided to join the proceedings to defend its employee and more generally freedom in the field of cryptocurrencies.
Coinbase’s General Counsel, Paul Grewal, told CNBC in a statement:
“We saw this as a much bigger problem (…) Because it sets a dangerous precedent where the law interferes in a technology.”
He then added that when “bandits are on the run on a highway, no one is banning access to that road for all that.” For Coinbase, American justice uses “a hammer instead of a scalpel”. That’s why they plan to pay the plaintiffs’ lawyers and all the costs associated with the proceedings.
And beyond the specific case of Tornado Cash, it’s also about preserving the nascent cryptocurrency industry. Grewal adds that “at a time when we should be encouraging innovation, this kind of fear and uncertainty will do the opposite. It will make developers wonder if by pushing the industry forward, they might be putting themselves at risk.” The tug of war between cryptocurrency giants and regulators around the world continues. Money laundering, the fight against tax evasion, but also individual freedom and anonymity of exchanges, all contradictory elements that will have to be dealt with to draw the contours of a sector still under supervision.
