Treasury Department’s Authority to Impose Sanctions on Tornado Cash Upheld by Federal Court
The U.S. District Judge Robert Pitman has upheld the Treasury Department’s authority to impose sanctions on the cryptocurrency mixer Tornado Cash, dismissing a legal challenge brought by Tornado Cash users. The judge granted summary judgment in favor of the government, affirming the Office of Foreign Assets Control’s (OFAC) right to cite Tornado Cash under sanctions statutes. The court ruled that Tornado Cash operates as an “association” and its smart contracts constitute “property” subject to sanctions. The plaintiffs’ argument that the government’s action violated the First Amendment was rejected, as they failed to show any infringement. The judge also noted that the plaintiffs could have pursued a Fifth Amendment claim regarding their inability to access Ethereum trapped in a Tornado Cash smart contract pool.
– Treasury Department’s authority to impose sanctions on Tornado Cash upheld
– Tornado Cash operates as an “association” and its smart contracts considered “property” subject to sanctions
– Plaintiffs’ argument of First Amendment violation rejected
– Plaintiffs could have pursued a Fifth Amendment claim, but failed to do so
– Cryptocurrency exchange Coinbase continues to support the plaintiffs and believes Fifth Circuit appellate review is necessary
The Treasury Department accused Tornado Cash of laundering over $7 billion worth of virtual currency, including facilitating transactions for North Korean hackers. The court highlighted the threat posed by North Korea’s cyber-enabled activities to the international financial system. This story was drafted using Decrypt AI and fact-checked.
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