A Renewed Legal Challenge
The United States Treasury is back in the legal hot seat, faced with a fresh lawsuit from a group of six individuals supported by the cryptocurrency exchange Coinbase. These plaintiffs are aiming to overturn the decision to sanction the infamous crypto mixer, Tornado Cash, claiming it overstepped bounds that even the Treasury can’t ignore.
Details of the Motion
On April 5, a Texas District Court was presented with a motion for partial summary judgment. This motion is a significant stride towards holding the U.S. Office of Foreign Asset Control (OFAC) accountable for its actions against Tornado Cash, which was originally sanctioned back in September 2022.
If the court grants this motion, it may allow the judge to rule on certain factual issues immediately, while reserving other matters for trial.
Key Arguments by Plaintiffs
The plaintiffs assert two main arguments: First, they claim that OFAC has acted beyond its authority as laid out by the International Emergency Economic Powers Act (IEEPA). Their stance hinges on the idea that the IEEPA is intended for property-related actions against foreign individuals, not against immutable open-source software.
In their motion, the plaintiffs state:
“An immutable smart contract is incapable of being owned, it is not property, and the Department lacks authority under IEEPA and the North Korea Act to prohibit transactions with those smart contracts.”
Free Speech Matters
The second main argument centers around the First Amendment, with the plaintiffs claiming that by banning Tornado Cash’s open-source code, OFAC is infringing upon their right to free speech. They argue that a prohibition on all uses of Tornado Cash is akin to silencing anyone who strives to communicate, drawing a parallel to banning the printing press due to a minority potentially using it for harmful purposes.
A Push for Internet Privacy Rights
Underlying this legal surge is a broader ambition to reclaim internet privacy rights for U.S. citizens. This motion is part of the ongoing saga where the plaintiffs, including Joseph Van Loon and Tyler Almeida, have previously engaged with the Tornado Cash platform.
What’s Next for Tornado Cash?
As the battle rages on, the creator of Tornado Cash, Alexey Pertsev, finds himself grappling with serious allegations back in The Netherlands. Having been detained since August 18 for money laundering, Pertsev’s plight highlights the complexities and risks tied to the cryptocurrency landscape.
The resolution of this case could set a significant precedent impacting how cryptocurrencies and open-source technologies are treated under U.S. law. For now, coin enthusiasts and users of Tornado Cash will be keeping a close watch on the developments in this compelling legal drama.
