Tornado Cash Users Set Up A Lawsuit Against The US Treasury

Key Points:

• Six people attempting to reverse the US Treasury’s decision to penalize crypto mixer Tornado Cash have recently presented four important points in favor of their case.
• Plaintiffs claimed that penalizing Tornado Cash violated the first amendment’s guarantee of free expression.
• They further claim that the Treasury’s characterization of Tornado as an unincorporated association fails the standard for such an organization.

Six persons battling the US Treasury to reverse Tornado Cash penalties stated in their most recent papers that the US lacks the jurisdiction to restrict the platform. The plaintiffs submitted their reply brief, requesting that the penalties be lifted. The lawsuit against the US Treasury is being funded by Coinbase.

Individuals contend in a May 24 filing in support of an earlier petition for partial summary judgment that the issue is not about carving out specific rules for new technology but rather about government overreach and a violation of First Amendment rights.

Plaintiffs claimed that sanctioning Tornado Cash violated the First Amendment by impeding free expression. To preserve their privacy, the plaintiffs employed open-source software. According to the complaint, punishing the open-source platform violates the basic rights of American residents.

The plaintiffs further claimed that these punishments are based on the incorrect assumption that everybody who owns TORN is a member of a legally recognized entity named “Tornado Cash.”

The statute used to penalize the crypto mixer states that it can only prohibit property. The legal definition of property, however, is anything that may be owned. But, no one can own, manage, or alter the privacy-focused software. No one, even founders, developers, and users who happen to have TORN in their wallets, can modify or control the platform.

Even if these smart contracts are constituted property, the plaintiff’s third point is that no Tornado Cash company has any “interest” in them, hence the Treasury lacks the ability to penalize them.

Soon after, Coinbase’s chief legal officer, Paul Grewal, outlined the points in a Twitter thread, saying that the government is attempting to exploit the property sanctions act to prohibit open-source software, which is antithetical to the law’s goals.

Coinbase has joined the case against the United States Department of Treasury, which was initially filed on September 8, 2022. Joseph Van Loon, Tyler Almeida, Alexander Fisher, Preston Van Loon, Kevin Vitale, and Nate Welch are the six plaintiffs. According to the lawsuit, the majority of the group had previously engaged with Tornado Cash.

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Harold

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