The Blockchain Association is actively supporting six plaintiffs who are engaged in legal proceedings against the United States Treasury’s Office of Foreign Assets Control (OFAC). The focal point of this legal dispute is OFAC’s imposition of sanctions on Tornado Cash, a cryptocurrency mixer. In a recent amicus curiae brief submitted to a U.S. appellate court on November 20, the Blockchain Association argued that OFAC’s decision to sanction Tornado Cash lacked legality.
Blockchain Association argues against OFAC sanctions
The Blockchain Association also noted that the OFAC exceeded its statutory authority, branding it as “arbitrary and capricious,” thus violating the U.S. Constitution. This marks the second amicus brief filed by the Blockchain Association in solidarity with a group of Tornado Cash users contesting a lower court’s ruling that upheld OFAC’s decision to designate the cryptocurrency mixer as a sanctioned entity. In a statement released on November 20, Marisa Coppel, senior counsel at the Blockchain Association, stressed the need for OFAC to target malicious actors instead of outright banning tools.
She contends that the organization has no rightful authority over the tools. Coppel asserted that the OFAC must view Tornado Cash as what it is; a tool that anyone can choose to use. She further suggested that rather than sanctioning a tool with a lawful purpose, OFAC should stay focused on addressing the misuse of such tools by bad actors. The Blockchain Association’s brief asserted that OFAC’s actions could set a dangerous precedent, exceeding its authority and putting the privacy rights of law-abiding Americans at risk.
Calls for legislative approval to preserve privacy rights
The association recommended that OFAC adhere to the law by seeking approval from Congress if it aims to ban crypto mixers like Tornado Cash. According to the Blockchain Association, pursuing legislative approval from Congress for supplemental authority in the context of decentralized digital assets is the appropriate course of action, cautioning against improperly stretching existing authorities. The association highlighted the potential slippery slope that could endanger various freely available internet-based tools.
Consistently maintaining that Tornado Cash operates without an owner or operator and can function automatically without human intervention, the Blockchain Association aims to counter OFAC’s initial sanction on Tornado Cash in August 2022. OFAC alleged that individuals and groups had utilized the mixer to launder over $7 billion in cryptocurrencies since 2019. This included funds associated with the North Korea-affiliated Lazarus Group, which reportedly stole $455 million. This legal battle between Tornado Cash users and OFAC has now seen the Blockchain Association support Tornado Cash.
The lawsuit revolves around the legality and authority of OFAC’s decision to sanction the cryptocurrency mixer. The association argues for a more targeted approach, urging OFAC to focus on addressing the misuse of tools by bad actors rather than imposing outright bans. Furthermore, the association advocates for seeking legislative approval from Congress for any bans in the decentralized digital asset context. The outcome of this legal battle could establish a precedent for the regulation of privacy protocols and cryptocurrency mixers in the United States.
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