Coinbase Fights for Tornado Cash's Right to Mix Cryptocurrencies in Court
Date: 2023-11-15 Author: Dima Zakharov Categories: IN WORLD
The Legal Battle Unfolds
In a recent legal development, Coinbase, a prominent cryptocurrency exchange, has contested a Texas Federal Court ruling that denied the motion to lift sanctions against the Tornado Cash mixer. The group of plaintiffs, represented by attorneys for individuals like Joseph Van Luna and Tyler Almeida, claims that the U.S. Department of the Treasury exceeded its authority in imposing sanctions on Tornado Cash. They argue that the court wrongly sided with the Treasury.
The plaintiffs argue that Tornado Cash, being neither a foreign citizen nor a company, should not be subject to sanctions. Furthermore, they assert that sanctions on smart contracts are unlawful since these contracts are not owned by anyone and are beyond human control.
Legal History and Appeals
This legal battle began with an initial lawsuit that was rejected in August 2023. The court then affirmed the legality of the sanctions, stating that the decentralized autonomous organization (DAO) governing Tornado Cash derived benefits from the mixer's smart contracts, justifying the imposition of sanctions. An appeal, filed on November 13, will be considered by the United States Fifth Circuit Court of Appeals.
Tornado Cash: Decentralized Mixer Under Scrutiny
Tornado Cash, a decentralized cryptocurrency mixer operating on the Ethereum network, enables users to conceal the source and destination of transactions. Due to the U.S. Treasury sanctions, the project's domain was blocked, and its GitHub repository was removed. Additionally, Circle, the company behind the USD Coin (USDC), froze around $75,000 in USDC from Ethereum addresses associated with Tornado Cash.
Legal Ramifications and Global Impact
The legal saga surrounding Tornado Cash extends beyond the courtroom. In August of the previous year, one of Tornado Cash's developers, Alexey Pertsev, was arrested in Amsterdam, facing charges related to concealing criminal financial flows and facilitating money laundering through the decentralized service. This year, the U.S. government formally charged and arrested Tornado Cash founders Roman Storm and Roman Semenov for money laundering exceeding $1 billion and violating sanctions.
On the same day, the FBI released a list of six Bitcoin wallets linked to the North Korean hacking group Lazarus Group. This group has been actively exploiting cryptocurrency-related exploits for years, accumulating assets worth billions of dollars.
