Coinbase Supports Lawsuit Against the U.S. Treasury

In a lawsuit pointed out Thursday in a U.S. district court in Texas, six users of Tornado Cash blamed the Treasury Department for disregarding constitutional rights to free speech and infringing its authority in sanctioning the cryptocurrency mixer.

The Treasury Department inflicted sanctions on Tornado Cash last month over accusations that it had laundered more than $7B in virtual currency. The department displays that some earnings went to North Korean government-backed hackers.

Tornado Cash is a famous decentralized application created on the Ethereum network. By integrating cryptocurrencies, the online service allows it to suppress the origin or destination of digital payments, improving their anonymity.

Tornado Cash did not comment on the sanctions set on Aug. 8, and examples for the platform were not directly reachable.

The lawsuit argued that the Treasury Department’s Office of Foreign Assets Control (OFAC) has individual sanctions authority. However, its jurisdiction does not expand to software code and smart contracts.

Details Of The Lawsuit

According to the lawsuit Tornado, Cash does not represent a person, entity, or organization. It is a decentralized, open-source software scheme that converts some privacy for Ethereum users.

Coinbase CEO Brian Armstrong said in a blog post that the Treasury Department had gone too far in favor of a proprietary technology over another person.

Armstrong replied that there are honest applications for this type of technology. Due to these sanctions, many innocent users now have entangled funds and lost access to a critical privacy tool.

The Treasury Department did not directly respond to a demand for remark.