Blockchain Association Supports Lawsuit Against OFAC’s Sanctions on Tornado Cash

Crypto advocacy group argues OFAC’s decision exceeds authority and violates privacy rights

The Blockchain Association has voiced its support for six plaintiffs who are suing the United States Treasury’s Office of Foreign Assets Control (OFAC) over its sanctions on Tornado Cash, a popular privacy protocol in the cryptocurrency industry. The association filed an amicus curiae brief to a U.S. appellate court, asserting that OFAC’s decision was unlawful, arbitrary, and violated the U.S. Constitution. This marks the second time the Blockchain Association has backed Tornado Cash users in their legal battle against OFAC.

The Unlawfulness of OFAC’s Sanctions:

In the amicus brief, the Blockchain Association argued that OFAC’s decision to sanction Tornado Cash exceeded its statutory authority. The association emphasized that OFAC should focus on sanctioning bad actors rather than banning tools that have legitimate purposes. Marisa Coppel, senior counsel at the Blockchain Association, stated that OFAC’s action sets a dangerous precedent and jeopardizes law-abiding Americans’ right to privacy.

The Need for Legislative Approval:

The Blockchain Association proposed that OFAC should seek approval from Congress to ban crypto mixers like Tornado Cash, rather than stretching its existing authorities. The association highlighted the importance of acting within the bounds of the law and avoiding a power grab that could threaten other internet-based tools. By seeking legislation from Congress, OFAC can ensure that its actions align with the unique nature of decentralized digital assets.

The Autonomy of Tornado Cash:

The Blockchain Association has consistently maintained that Tornado Cash operates autonomously without the need for human intervention or assistance. The association emphasized that Tornado Cash has no owner or operator, making it difficult to hold any individual or entity responsible for its usage. This characteristic of decentralization further supports the argument that OFAC’s sanctions are misguided.

OFAC’s Allegations and Concerns:

OFAC initially sanctioned Tornado Cash in August 2022, alleging that the mixer had been used to launder over $7 billion in cryptocurrencies since 2019. The agency specifically pointed to the involvement of the Lazarus Group, a North Korea-affiliated hacking group, in stealing $455 million. While the concerns raised by OFAC regarding illicit activities are valid, the Blockchain Association argues that targeting the tool itself is not the appropriate solution.

Conclusion:

The support of the Blockchain Association for the plaintiffs suing OFAC over its sanctions on Tornado Cash highlights the ongoing debate surrounding privacy in the cryptocurrency industry. The association’s amicus curiae brief asserts that OFAC’s decision exceeds its authority and infringes upon Americans’ right to privacy. The case raises important questions about the balance between regulating illicit activities and preserving the innovative potential of decentralized technologies. As the legal battle continues, the outcome will have implications for the future regulation of crypto mixers and the broader cryptocurrency ecosystem.