Court dismisses Coin Center’s Tornado Cash lawsuit against US Treasury

A U.S. territory tribunal has dismissed Coin Center’s suit against the U.S. Treasury, successful which the crypto advocacy radical claimed that the Treasury overstepped its ineligible authorization by sanctioning Tornado Cash—a determination that it alleged infringes upon the privateness rights of galore Americans.

As reported successful the summary judgment, Coin Center argued that the Office of Foreign Assets Control’s (OFAC) designation of Tornado Cash violated the First Amendment, which protects the close to association. Coin Center contended that the sanctioning blocked a fiscal privateness instrumentality they relied connected to marque donations to organizations and causes and was not narrowly tailored to execute its aims.

However, the tribunal ruled that the First Amendment was not violated by OFAC’s designation of Tornado Cash. The tribunal further stated that adjacent if it were, the designation satisfied the requisite level of scrutiny.

The judgment

The cardinal points of the ruling are:

• OFAC did not transcend its statutory authorization nether the International Emergency Economic Powers Act (IEEPA) by designating Tornado Cash’s halfway bundle instrumentality due to the fact that foreigners (the founders, developers, and DAO) person a fiscal “interest” successful the accrued usage and popularity of Tornado Cash arsenic a whole.
• The designation was not arbitrary and capricious due to the fact that determination is grounds Tornado Cash laundered funds for North Korea. The designation aligns with U.S. sanctions policy, and OFAC considered reliance interests and imaginable losses done its licensing scheme.
• The designation did not interruption the First Amendment due to the fact that determination is nary close to usage a peculiar fiscal instrumentality for donations, and it did not compel disclosure of donors oregon forestall anonymous donations.
• The tribunal granted summary judgement for the authorities defendants and denied it for the plaintiffs, dismissing the case.

The tribunal noted that plaintiffs did not mention immoderate authorization supporting the beingness of a First Amendment close to usage a peculiar work oregon benignant of currency to marque donations for charitable oregon different purposes. Importantly, dissimilar erstwhile state of relation cases cited by plaintiffs, the designation of Tornado Cash did not compel backstage associations to disclose thing astir their donors oregon members.

According to an August 2022 Treasury press release, Tornado Cash was sanctioned owed to its relation successful laundering much than $7 cardinal worthy of virtual currency since its instauration successful 2019, including implicit $455 cardinal stolen by the Lazarus Group, a North Korean state-sponsored hacking group.

Coin Center’s communications manager Neeraj Agrawal tweeted successful effect to the ruling: “Disappointing. We program to appeal.”