Lawsuit against U.S. Treasury argues the government overreached by sanctioning Tornado Cash

Six individuals seeking the lifting of a ban on Tornado Cash, a platform that enhances privacy by mixing transactions, made four main arguments in court. filing The filing supports a Coinbase-backed lawsuit filed against the U.S. Treasury Department on September 8, 2022.

In its latest filing, plaintiffs say the lawsuit “does not enact special rules for new technology,” but rather holds the Treasury Department accountable for overreach in its decision to sanction Tornado Cash. claimed. The six plaintiffs include Joseph Van Roon, Tyler Almeida, Alexander Fisher, Preston Van Roon, Kevin Vitale and Nate Welch.

Plaintiffs alleged that the Treasury Department failed to show Tornado Cash as “alien.” Plaintiffs also questioned the Treasury Department’s definition of tornado cash. According to the Treasury Department, Tornado Cash is an unincorporated entity that includes everyone holding digital TORN tokens, regardless of whether the individuals have joined together for some common purpose.

Plaintiffs argue that this definition does not meet the Treasury Department’s definition of an “unincorporated entity.” The filing further states:

“The oddity of that definition is underscored by the ministry’s unprecedented step to explicitly exclude from designation the very individuals purported to form the ‘organizational structure’ of the association.”

on twitter threadCoinbase Chief Legal Officer Paul Grewal said the definition provided by the Treasury Department was “new in legal theory and wrong in fact.”

Plaintiffs also noted that the sanctions apply only to “property,” which is defined as anything that can be owned. However, the Treasury did not explain how Tornado Cash’s immutable open source smart contracts could be owned.

Plaintiffs further state that even if Tornado Cash’s smart contract is somehow proven to be “property,” the Treasury still finds that Tornado Cash has an “interest” in the smart contract. said it must be shown. Under the International Emergency Economic Powers Act (IEEPA), the Treasury Department must prove that the Tornado Cash entity has a legal, equitable, or beneficial interest in the property. Plaintiffs argue, however, that the Treasury Department has shown no such “interest.”

Gurvar puts it more simply:

“No one owns property rights to these immutable smart contracts, neither the founders nor the developers, and of course anyone who happens to have TORN in their wallet.”

Tornado Cash Sanctions Unconstitutional, Plaintiffs Claim

In closing arguments, plaintiffs said the sanctions violated the First Amendment’s freedom of speech and were therefore unconstitutional. Plaintiffs point out that the Treasury Department’s argument against the ban “just says that plaintiffs are free to speak elsewhere.”

Gulwal said the ban was “worrisome” because the government “cannot simply order law-abiding Americans to exercise their freedoms elsewhere, where there are far fewer personal protections.” that,’ he said.

Grewal clarified that the plaintiffs are not seeking any special rules for cryptocurrencies. Instead, it requires governments to meet basic legal requirements before banning access to privacy tools.Protect legitimate purchases and donations. “