Coinbase Fights Regulators for Crypto Mixing Service

Coinbase’s Chief Legal Officer (CLO) supports the motion to reopen the crypto mixer Tornado Cash. The company is financially backing the lawsuit.

The Plaintiffs prohibited from using the crypto privacy tool Tornado Cash have filed a motion for partial summary judgment to the court. In the filing, they argued that the sanctions against the crypto mixer are unlawful.

Coinbase Stands Up to the Regulators 

The court filings mention that the designation of Tornado Cash contradicts the law and exceeds the department’s statutory authority. It lists the reasons:

1. Tornado Cash is not a foreign ‘National’ or a ‘Person.’
2. The immutable smart contracts are not ‘property.’
3. The purported Tornado Cash person does not have an ‘interest’ in property in the immutable smart contract.

Paul Grewal, the CLO of Coinbase, believes that the arguments are “simple but powerful.” He tweeted, “The Constitution and laws of our country recognize that we don’t take away privacy from all just because of the unlawful acts of a few.”

Since last September, Coinbase has financed the lawsuit against the US Treasury Department for Tornado Cash sanctions. Meanwhile, Coinbase also fights its own legal battles as it was served with a Wells notice last month.

A Twitter user writes:

“I’m so happy that coinbase has decided to finally stand up to the SEC. Better late than never.”

Privacy Pools, an Alternative to Tornado Cash?

Last month, one of the early contributors to Tornado Cash launched Privacy Pools on Optimism Goerli testnet. It claims to fix the former’s flaws by using the Zero-Knowledge Proof, through which users can explain that their withdrawals are not part of illicit transactions.

In August last year, the US Treasury Department sanctioned the crypto mixer for facilitating money laundering from cybercrime. Later, the Dutch authorities also arrested the developer Alex Pertsev. 

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