Open source software isnโt property, and current sanctions laws are ill-equipped to handle this, lawyers argue.
Are smart contracts property? Are holders of a protocolโs cryptoย token members of an unincorporated association? Is banning open-source software an attack on free speech?
Those are the questions before a Unitedย 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 claimedย that the Unitedย States Department of Treasury sanctions against the privacy protocol violates the International Emergency Economic Powers Act (IEEPA) by failing to correctly identify a foreign โnationalโ and โpropertyโ related to Tornado Cash, and by not demonstrating sanctionable interest in immutable, open-source smart contracts.
โThe Department has failed to setย up that the immutable smart contracts can be owned,โ the filing reads.
They likewise argue that the Treasuryโs definition of Tornado Cash as an unincorporated association does not meet the test for such an association.
โ Thereย is nothing in the record to suggest that those token-holders have combined to execute the supposed โcommon purposeโ of operating, promoting, or updating the Tornado Cash privacy protocol,โ the filing said.
Should the Treasuryโs actions be authorized, the defendants argue that it would infringe on the 1st Amendment owingย to its broad nature.
โThe Departmentโs action violates the 1st Amendmentโs free speech clause as it prohibits Plaintiffs and thousands of other law-abiding American citizens from interacting with open-source code toย participate in a wide range of speech protected by the 1st Amendment,โ reads the docket.
Althoughย 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 doesnโt 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 โweak,โ keepingย inย mindย that the Treasury has only given โ 3 examples of money laundering have been found from millions of transactions.โ
Inย theย meantime, in the Netherlands, Tornado Cash developer Alexey Pertsev persistsย to face a trial over money laundering states. On Wednesday, Pertsev won the right to cross-examine blockchainย tech analytics company Chainalysis which isย frequently cited as a source of on-chain evidence during court cases.
Tornado Cashโs DAO was recently the victim of a vote fraud attack, and the attacker has begun to move their proceeds via Tornado Cash.
Sandali Handagama.
