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Coinbase Funds Lawsuit against US Treasury over Tornado Cash Sanctions

UTC by Ibukun Ogundare · 3 min read
Coinbase Funds Lawsuit against US Treasury over Tornado Cash Sanctions
Photo: Depositphotos

Now, six users of Tornado Cash are accusing the Treasury Department of violating their constitutional rights, and Coinbase is funding the case.

Crypto exchange Coinbase Global Inc (NASDAQ: COIN) is funding a lawsuit against the US Department of Treasury over the sanctions imposed on cryptocurrency mixer Tornado Cash. Reports stated that the crypto exchange is paying legal fees for two of its employees concerning the matter. Also, Coinbase is financially backing four other investors who are taking the Treasury department to court over its sanction of Tornado Cash.

Last month, the Treasury Department announced a ban on Tornado Cash over claims of facilitating money laundering. The national and finance Department added the platform to the Specially Designated Nationals list. The list contains blacklisted crypto addresses, individuals, and entities. This disallows American citizens from interacting with all names and individuals on the Specially Designated National list.

According to the agency, North Koreans used the platform to launder over $7 billion in cryptocurrencies. The Treasury noted that Tornado Cash “repeatedly failed” to act against the illegal activities that occurred on its platform. In addition to freezing the virtual crypto mixer, an examining judge also put the developer Alexey Pertsev in custody for two weeks. The developer’s detention led to a demonstration by a group of crypto advocates organized by Pertsev’s wife, Xenia Malik.

Coinbase to Finance Lawsuit in Support in Support of Tornado Cash

Now, six users of Tornado Cash are accusing the Treasury Department of violating their constitutional rights, and Coinbase is funding the case. The plaintiff said the Department is restricting their rights to free speech. They also claim that the agency is overstepping its authority in sanctioning Tornado Cash. Also, lawyers indicated in their legal complaint that none of the six plaintiffs is a criminal or terrorist. It is not a surprise that Coinbase is supporting Tornado Cash. The exchange’s CEO Brian Armstrong had earlier shown his displeasure with the Treasury’s Department against the virtual currency mixer. He added that the Department went too far in sanctioning a whole technology instead of a specific individual.

According to the lawsuit against the Office of Foreign Assets Control of the Department of Treasury, the agency has no jurisdiction over software code and smart contracts. The case said that “Tornado Cash is not a person, entity, or organization. It is a decentralized, open-source software project that restores some privacy for Ethereum users.”

Furthermore, Coinbase Chief Legal Officer Paul Grewal noted that sanctions against a platform that is built on a code are such a controversial issue, and it exceeds just Tornado Cash. He said:

“We saw this as a much larger problem. It sets a dangerous precedent – if this code can be designated without any limits imposed by law, any technology, any tool or system could be fair game.”

The Coinbase executive also mentioned that the sanctions on Tornado Cash had trapped the funds of innocent users. Also, users of the virtual currency mixer in America have lost access to a “critical privacy tool.”

Cryptocurrency news, News
Ibukun Ogundare

Ibukun is a crypto/finance writer interested in passing relevant information, using non-complex words to reach all kinds of audience. Apart from writing, she likes to see movies, cook, and explore restaurants in the city of Lagos, where she resides.

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