Six individuals backed by cryptocurrency exchange Coinbase have filed a motion for a partial summary judgment on April 5 in a Texas District Court. As part of their efforts to challenge the US Treasury’s decision to sanction crypto mixer Tornado Cash. If granted, the motion would allow the judge to rule on some of the factual issues while leaving others for trial.
The motion challenges the US Office of Foreign Asset Control’s (OFAC) decision to ban Tornado Cash. Claiming that the department exceeded its statutory powers under the International Emergency Economic Powers Act (IEEPA) and violated the free speech clause of the First Amendment to the US Constitution.
Plaintiffs’ Arguments
The plaintiffs argue that OFAC breached a section of the IEEPA by banning Tornado Cash, as the provision. Only allows the pursuit of property-related action against a foreign
“national” or “person,” and not open-source software.
The plaintiffs further argue that the smart contracts that provide the functionality to Tornado Cash. Should not be considered property under IEEPA as they cannot be owned. They claim that immutable smart contracts are incapable of being owned. And therefore do not constitute property, and that OFAC lacks the authority under IEEPA and the North Korea Act to prohibit transactions with those smart contracts.
Additionally, the plaintiffs argue that by banning the open-source code.
OFAC is violating
OFAC is violating the free speech clause of the First Amendment to the US Constitution. They argue that OFAC has the authority to take action against “crypto thieves” like North Korea’s Lazarus Group.
But a “total prohibition is thus grossly disproportionate” since money laundering only accounted for 0.05% of crypto transactions in 2021. The plaintiffs added that “to ban all uses of Tornado Cash is asking to banning the printing press. Because a tiny fraction of users might publish instructions on how to build a nuclear weapon.”
The plaintiffs have also highlighted that the motion is part of a broader effort to restore internet privacy rights for US citizens.
Background
This legal challenge is the most recent filing since the individuals first sued the US Department of Treasury in September. The six plaintiffs behind the filing are Joseph Van Loon, Tyler Almeida, Alexander Fisher, Preston Van Loon, Kevin Vitale, and Nate Welch. The filing details that most of the group had previously interacted with Tornado Cash.
The legal battle comes as Alexey Pertsev, the creator of Tornado Cash, faces his own troubles in The Netherlands. He has been held since August 18 on a series of money laundering charges.
