Cryptocurrency advocacy groups the Blockchain Association and the DeFi Education Fund have filed a brief with the United States District Court in Austin in the case brought by six individuals against the United States Department of Treasury over the Tornado Cash sanction. The amicus (friend of the court) brief supports the plaintiff’s request for a partial summary judgment.
The six plaintiffs in the case filed a lawsuit against the Treasury Department and associated parties in September, after Treasury’s Office of Foreign Assets Control (OFAC) listed addresses allegedly related to cryptocurrency mixer Tornado Cash in its document in August. List of Specially Designated Nationals and Blocked Persons.
The agency accused Tornado Cash of laundering more than $7 billion, including hundreds of millions for the North Korean hacker collective, Lazarus Group. The designation makes it illegal for Americans to interact with those addresses, under threat of heavy fines and jail terms.
1/Today, @BlockchainAssn and @fund_defi filed an amicus brief in Van Loon v. Treasury – fighting OFAC’s unlawful sanctions of the Tornado Cash software. OFAC’s decision raises serious regulatory and constitutional questions inhibiting We argue: the rights of many Americans.
We argued:
pic.twitter.com/dHxgrgBWNc— Marisa Tashman Coppel (@MTCoppel) April 12, 2023
The plaintiffs argued that OFAC violated the Administrative Procedures Act by sanctioning an entity that was not responsible for its sanction, violating users’ right to freedom of expression and deprivation of property (cryptocurrencies locked in the mixer) without due process. The plaintiffs filed a motion for partial summary judgment on the APA and free speech violation charges on April 5.
In his writing, the Blockchain Association and the DeFi Education Fund reiterated that Tornado Cash is software, not a person or property, and argued that it is a stand-alone tool that plays an important role in preserving user privacy. Blockchain Association CEO Kristin Smith added in a statement:
“Normally, OFAC would not consider sanctioning neutral tools used by some people for illegal activities, it would sanction the people who commit those activities. The same perspective should apply to OFAC’s action against Tornado Cash.”
The letter expanded the legal arguments already presented. For example, he introduced the principal issues doctrine into his analysis of OFAC’s authority and stated:
“OFAC sanctions are not ‘lawful’ for another reason: sanctions are arbitrary and capricious.”
He affirmed that, if the sanction is allowed to be maintained, it would be “effecting a vast expansion of OFAC’s power.”
The Cryptocurrency Expert Group Coin Center sued the same parties over the Tornado Cash sanction in October. The creator of Tornado Cash, Alexy Pertsev, was detained in the Netherlands several days after OFAC’s initial designation of Tornado Cash. He is charged with money laundering.
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