By
Steve Muchoki
April 25th, 2024
Coinbase Legal Chief Grewal has explained Tornado Cash’s recent filing against the Treasury Department’s case in support of privacy.
Paul Grewal, the Chief Legal Officer (CLO) of the Coinbase exchange has spoken out in support of popular crypto mixer Tornado Cash. The mixer has been in a drawn out legal battle with US authorities over money laundering allegations. In a recent thread posted on X, Grewal announced Tornado Cash’s response to the United States Treasury, indirectly highlighting that Coinbase is in support of the mixer.
“We continue to support a critical legal challenge to preserve Americans’ right to privacy. Today, the Tornado Cash plaintiffs replied to Treasury’s arguments in the Fifth Circuit Court of Appeals with a very strong brief,” wrote he.
Grewal Details Tornado Cash Response
Grewal points out that the Treasury needs to establish that its case is against an association comprising people with a common purpose. The CLO also added that in an attempt to further its case against the mixer, the agency has shifted its argument supposedly explaining that Treasury, its team of developers, and all TORN token holders, share a common goal.
According to the response from Tornado Cash, the Treasury is trying to control the mixer. The agency is claiming authority to do so under the International Emergency Economic Powers Act (IEEPA). However, the filing states that the IEEPA does not apply in this case as the Treasury has failed to satisfy the statutory requirements for it to apply. Tornado Cash’s filing reads:
“It is now clear that the Department of the Treasury is asserting the unprecedented power to prohibit American citizens from interacting with immutable, open-source software code that cannot be deleted, edited, or controlled in any way.”
Grewal explains that immutable and open-source software code does not qualify as “property.” Unfortunately for the Treasury, this is a bit of a problem because the agency is “authorized to regulate only ‘property’ in which a foreign national has an interest.” One of the CLO’s posts states that the Treasury must receive authority from Congress. The Coinbase exec says this is necessary to regulate the use of Tornado Cash and other open-source software code. Grewal said:
“Bending old laws past their breaking point is not the way. We look forward to the Fifth Circuit’s careful consideration.”
Coinbase is Behind Tornado
Last April, Coinbase supported action seeking a reversal of the Tornado Cash ban. However, Judge Robert Pitman, of the US District Court for the Western District of Texas, dismissed the case in August, without going to trial. According to the judge, the sanctions had no direct effect on the plaintiffs, which include Ethereum core developer Preston Van Loon. Judge Pitman also ruled that the Treasury Department has a constitutional right to sanction Tornado Cash.
The judge also dismissed the argument that smart contracts do not qualify as property because they are “immutable and therefore cannot be owned.” Pitman pointed out that “contracts of any nature whatsoever” is included in the Treasury’s Office of Foreign Assets Control’s definition of property.