Coinbase Sues U.S. Treasury Over Tornado Cash

Coinbase has bankrolled a lawsuit filed against the U.S. Treasury Department and other government officials over the decision to impose sanctions on the crypto mixing tool. 

Government Department Sued By Users 

The lawsuit, filed by six Tornado Cash users, has named Treasury Secretary Janet Yellen and other individual government officials, along with the Treasury Department, over their decision to sanction the crypto mixing tool back in August. The plaintiffs include Coinbase employees and other Ethereum users like Preston Van Loon, who is claiming that the sanction is preventing him from accessing Ethereum funds worth thousands of dollars deposited with Tornado Cash. 

On Thursday, he tweeted, 

“Today I joined five other plaintiffs in challenging the U.S. Treasury’s and OFAC’s sanctions against Tornado Cash, a piece of software running on Ethereum. I did not take this decision lightly. Code is speech and free speech is a constitutional right worth protecting.”

The lawsuit claims that the government does not have the authority to sanction Tornado Cash, as the motion violates the free speech and property rights of all American citizens as per the U.S. Constitution. 

Coinbase CEO Speaks Up

According to the 20-page complaint filed in the Texas federal court, the sanction threatens the ability of law-abiding Americans to engage freely and privately in financial transactions. 

Coinbase CEO Brian Armstrong released a statement addressing the matter, in which he mentioned that the lawsuit has appealed to the court to remove Tornado Cash from the U.S. sanctions list. 

He said, 

“In this case, Treasury went much further and took the unprecedented step of sanctioning an entire technology instead of specific individuals…there are legitimate applications for this type of technology and as a result of these sanctions, many innocent users now have their funds trapped and have lost access to a critical privacy tool.”

Future Of Open Source Tech Is At Stake

The U.S. Treasury Department imposed sanctions on Tornado Cash, which is a popular mixing tool that can obscure crypto transactions. The official statement was that the tool had been specifically used by money launderers and other malicious actors (like North Korean hacker group Lazarus) to siphon away millions of dollars worth of funds.

The industry is watching the matter with bated breath as its outcome could dictate the future of open-source code or decentralization technology and how much power the government can wield over them. Since cryptocurrency and blockchain technology are based on decentralization, the outcome could have severe implications on the industry for years to come. 

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.