Sep 09, 2022 Muhammad Hamza Afzal
Coinbase, one of the largest U.S.-based cryptocurrency exchanges, has announced that it will bankroll a lawsuit against the United States Treasury Department that challenges the department’s decision of sanctioning Tornado Cash smart contracts. Brought in by a group of six plaintiffs, two of which are Coinbase employees, the lawsuit is requesting the court to exclude Tornado Cash from the U.S. sanctions list.
Tornado Cash is a decentralized non-custodial privacy solution built on the Ethereum blockchain that ensures privacy by permitting users to deposit assets from one crypto address and withdraw them from a different crypto address. In August this year, the US Treasury sanctioned Tornado Cash after finding that North Korean hackers and other illicit actors were using the program to launder digital tokens worth billions of dollars. Dubbing the solution as a “notorious virtual currency mixer”, the Treasury claimed that the project was used to launder more than $7 billion worth of digital assets since its inception in 2019.
While Coinbase believes that illicit actors must be held accountable in a court of law, it deems the Treasury’s decision of sanctioning an entire technology as an unprecedented step. The exchange also believes that by sanctioning Tornado Cash, the Treasury exceeded the authority granted to it by the US Congress. Sharing his legal argument, the exchange’s chief legal officer Paul Grewal accused the Treasury’s Office of Foreign Assets Control (OFAC) of harming innocent users who are seeking ways to legitimately preserve their privacy using solutions like Tornado Cash. While expressing its compliance with the law, Coinbase is hopeful that users will soon be able to regain access to their funds once the sanctions are lifted.