3 Questions on Open Source Software and Sanctions Laws That Could Change Crypto Forever

3 Questions on Open Source Software and Sanctions Laws That Could Change Crypto Forever


Lawyers argue that current sanctions laws are ill-equipped to handle open source software, as a lawsuit from a group of crypto engineers and investors in response to sanctions placed on the Tornado Cash protocol comes closer to having its day in court.

Open source software isn’t property, and current sanctions laws are ill-equipped to handle this, lawyers argue.

Are smart contracts property? Are holders of a protocol’s crypto token members of an unincorporated association? Is banning open-source software an attack on free speech?

Those are the questions before a United States court in Austin, Texas, as a lawsuit from a group of cryptocurrency engineers and investors in response to sanctions placed on the Tornado Cash protocol comes closer to having its day in court.

In a court filing from late Wednesday, the plaintiffs claimed that the United States Department of Treasury sanctions against the privacy protocol violates the International Emergency Economic Powers Act (IEEPA) by failing to correctly identify a foreign “national” and “property” related to Tornado Cash, and by not demonstrating sanctionable interest in immutable, open-source smart contracts.

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“The Department has failed to set up that the immutable smart contracts can be owned,” the filing reads.

They likewise argue that the Treasury’s definition of Tornado Cash as an unincorporated association does not meet the test for such an association.

There is nothing in the record to suggest that those token-holders have combined to execute the supposed ‘common purpose’ of operating, promoting, or updating the Tornado Cash privacy protocol,” the filing said.

Should the Treasury’s actions be authorized, the defendants argue that it would infringe on the 1st Amendment owing to its broad nature.

“The Department’s action violates the 1st Amendment’s free speech clause as it prohibits Plaintiffs and thousands of other law-abiding American citizens from interacting with open-source code to participate in a wide range of speech protected by the 1st Amendment,” reads the docket.

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Although while Tornado Cash is usually the tool of choice for attackers to obfuscate their profits such as with the hack of Crypto.com last January or the Transit Finance hack, law enforcement specialists have previously cautioned that this doesn’t necessarily make it complicit in money laundering.

In the court filing, the plaintiffs argue that the evidence Tornado Cash is a tool for money laundering is “weak,” keeping in mind that the Treasury has only given “ 3 examples of money laundering have been found from millions of transactions.”

In the meantime, in the Netherlands, Tornado Cash developer Alexey Pertsev persists to face a trial over money laundering states. On Wednesday, Pertsev won the right to cross-examine blockchain tech analytics company Chainalysis which is frequently cited as a source of on-chain evidence during court cases.

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Tornado Cash’s DAO was recently the victim of a vote fraud attack, and the attacker has begun to move their proceeds via Tornado Cash.

Sandali Handagama.

Source

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