The U.S. Treasury Department is facing litigation for its previous move to ban Tornado Cash.
Aggrieved crypto proponents have filed a lawsuit against the United States Department of the Treasury. The suit follows the Treasury’s decision to blacklist Tornado Cash’s crypto mixer, citing its abuse by unscrupulous individuals.
Filed by six individuals in the Western District of Texas, the lawsuit claims that the Treasury’s ban of Tornado Cash was an overstep of its regulatory boundaries, as Tornado Cash – by provisions of the Administrative Procedures Act – is not an entity under the surveillance of the OFAC.
The lawsuit was filed against the Treasury’s Office of Foreign Assets Control (OFAC); Director of OFAC Andrea Gacki, and Secretary of the Treasury Janet Yellen. According to the suit, the proscription of Tornado Cash was an attempt at undue censorship. A particular claim that has remained popular amongst crypto proponents.
Additionally, the lawsuit highlights the fact that the ban has locked the plaintiffs out of their funds on Tornado Cash. The plaintiffs claim that these funds are used for purposes permissible by law and also humanitarian affairs, including donations to Ukraine. The lawsuit was bankrolled by the American exchange Coinbase.
Coinbase’s involvement in the suit is expected, as the exchange stands to be affected the most by the ban. However, it has previously been noted that its Ethereum developers are stationed outside the U.S., and the censorship would not cause as much effect on them.
The plaintiffs include co-founder of blockchain firm Prysmatic Labs, Preston Van Looon; Principal Crypto & Web3 Engineer at GridPlus, Kevin Vitale; Coinbase employees, Nate Welch and Tyler Almeida; ex-Amazon engineer Joseph Van Loon; and NewSpace angel investor Alex Fisher. All parties involved claim direct adverse effects of the Tornado Cash ban.
Recall that the OFAC placed a ban on Tornado Cash on August 8, citing the usage of the crypto mixer for criminal activities since its launch in 2019, including money laundering and illegal financing. The ban also prohibited all American entities from interacting with the mixer’s addresses or using its services.
The agency proscribed the mixer’s addresses. The ban has sparked outrage in the crypto community, with several people asserting that this is the beginning of censorship in the industry.
Furthermore, The Crypto Basic reported on August 12 that Dutch authorities arrested Tornado Cash developer Alexey Portsev in the Netherlands. Shortly after, a community protest ensued in Amsterdam in response to the arrest. The recent litigation is another avenue the crypto community is using to fight against the censorship attempt by the OFAC.
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