Federal Court Supports Sanctions on Tornado Cash Crypto Mixer Despite User Protest

cryptonews.com:

A federal court has backed the US Treasury Department’s right to impose sanctions on the cryptocurrency mixer Tornado Cash, dismissing a lawsuit filed by six users.

Last year, the US Treasury’s Office of Foreign Assets Control (OFAC) accused Tornado Cash of laundering more than $7 billion of cryptocurrencies since its inception in 2019. The Department further alleged that Tornado Cash was a key tool used by malicious actors like North Korea's Lazarus Group to launder crypto funds that were stolen from exchanges and games like Axie Infinity.

The ruling came from U.S. District Judge Robert Pitman, simultaneously denying the summary judgment requested by six plaintiffs, including two Coinbase employees.

On Aug 17, Pitman concluded the agency’s determinations on Tornado Cash are valid, and affirmed that the OFAC is entitled to frame Tornado Cash under sanction statutes.

“The record sufficiently supports OFAC’s determination that the founders, the developers, and the Tornado Cash DAO have acted jointly to promote and govern Tornado Cash and to profit from these activities.”

The six plaintiffs noted that the government’s actions on the crypto mixer were unlawful and it violated the First Amendment. The users further argued that they were denied the ability to engage in “socially valuable speech” through donations to political and social causes.

Pitman disagreed with the claims saying users “have not shown that the government’s action in any way implicates the First Amendment.”

Paul Grewal, chief officer of crypto exchange giant Coinbase, which backs the lawsuit, noted that Coinbase continues to believe ‘Plaintiffs’ challenge to OFAC’s Tornado Cash action is right.”

In a statement to CoinDesk, a Treasury spokesperson noted that the