Blockchain Association Offers Support to Lift Sanctions on Tornado Cash

UTC by Bhushan Akolkar · 3 min read
Blockchain Association Offers Support to Lift Sanctions on Tornado Cash
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Blockchain Association slammed the OFAC stating that the regulator should catch hold of individuals engaging in illicit activities instead of imposing the ban.

The Blockchain Association has reiterated its support for six plaintiffs challenging the US Treasury Office of Foreign Assets Control (OFAC) over the sanctions imposed on Tornado Cash, a crypto mixer.

In a recent amicus curiae brief to a US appellate court, the advocacy group argued that OFAC’s sanction on the privacy protocol was not only unlawful but also exceeded its statutory authority. The Blockchain Association claimed that the decision was “arbitrary and capricious,” violating the US Constitution. This marks the second amicus brief filed by the Blockchain Association in favor of Tornado Cash users appealing OFAC’s decision.

Tornado Cash (TORN) is a decentralized and non-custodial privacy solution operating on the Ethereum blockchain. Users can deposit ETH or ERC-20 tokens into Tornado Cash, and upon withdrawal to a new address, the connection between the initial deposit and subsequent withdrawal becomes untraceable. This mechanism also ensures the privacy of assets, addressing the transparency issue inherent in public blockchains through the implementation of private transactions.

OFAC initially imposed sanctions on Tornado Cash in August 2022. The regulator claimed that individuals and entities utilized the mixer to launder over $7 billion in cryptocurrencies since 2019. This sum also included the $455 million stolen by the Lazarus Group, affiliated with North Korea.

Blockchain Association Slams OFAC

Marisa Coppel, senior counsel at the Blockchain Association, stressed in a statement on November 20 that OFAC should concentrate on sanctioning individuals engaging in illicit activities rather than imposing bans on tools, asserting that the authority lacks jurisdiction over such tools. Coppel said:

“OFAC must see Tornado Cash for what it is: a tool that can be used by anyone. Rather than sanctioning a tool with a lawful purpose, OFAC should remain focused on the bad actors that misuse such tools. OFAC’s action sets a dangerous new precedent that drastically exceeds their authority and jeopardizes law-abiding Americans’ right to privacy.”

In its amicus curiae brief, the Blockchain Association recommended that OFAC adhere to legal procedures by obtaining congressional approval to prohibit crypto mixers like Tornado Cash. The association emphasized the need for legislation from Congress to grant additional authority in the distinctive context of decentralized digital assets, cautioning against an improper expansion of existing powers. It warned that such a move could set a dangerous precedent, potentially endangering various freely available internet-based tools.

The Blockchain Association has consistently maintained that Tornado Cash operates autonomously, devoid of any owner or operator, and functions without human intervention or assistance.

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