The Blockchain Association has rallied behind six plaintiffs in their legal battle against the sanctions imposed on the crypto mixer, Tornado Cash. It is a bold move that challenges the United States Treasury’s Office of Foreign Assets Control (OFAC).
The crypto advocacy group filed a compelling plea on November 20. They asserted that OFAC’s decision not only defied the law but also exceeded its designated authority. They deemed their action to be “arbitrary and capricious” in violation of the U.S. Constitution.
Previous calls to remove sanctions on Tornado Cash
This marks the second time that Blockchain Association is collecting a group of Tornado Cash users to appeal a lower court’s ruling. The ruling upholds OFAC’s decision to blacklist the privacy protocol.
Senior counsel for the Blockchain Association, Marisa Coppel, emphasized the need for a shift in focus. Coppel urged OFAC to target bad actors rather than issuing outright bans on tools it has no jurisdiction over.
OFAC must see Tornado Cash for what it is: a tool that can be used by anyone
Marisa Coppel, Senior counsel for the Blockchain Association.
Coppel warned that the precedent set by the OFAC could jeopardize the privacy rights of law-abiding Americans. She highlighted the potential dangers of OFAC’s actions.
OFAC’s action sets a dangerous new precedent that drastically exceeds their authority and jeopardizes law-abiding Americans’ right to privacy
As per the plea, the OFAC should have seeked legislative approval from Congress to ban crypto mixers like Tornado Cash. The association contends that such a power-grab could lead to restrictions on various internet-based tools that have been freely available.
Why the sanctions on Tornado Cash?
The Blockchain Association says that Tornado Cash operates without a designated owner or operator, functioning automatically without human intervention or assistance. The association’s stance challenges OFAC’s initial move in August 2022, when it sanctioned Tornado Cash.
This was echoed by Republican lawmaker, Tom Emmer when he said that the underlying technology behind Tornado Cash is “neutral, and the expectation of privacy is normal.”
The OFAC alleged that over $7 billion in cryptocurrencies since 2019 have been laundered via Tornado Cash. OFAC pointed fingers at the North Korea’s Lazarus Group, which allegedly used the mixer to launder $455 million stolen funds.
Other efforts by the Blockchain Association
The Blockchain Association remains steadfast in its pursuit of safeguarding the decentralized nature of the crypto world. They have time and again emphasized the importance of striking a balance between regulatory measures and the preservation of privacy in the rapidly evolving crypto sector.
In May 2023, the advocacy group raised objections to a proposed custody rule change by the US Securities and Exchange Commission (SEC). They warned that the change could “drastically curtail” crypto investment.
Coppel back then argued that the proposal deviates from the SEC’s obligation to take an asset-neutral approach. SEC’s proposal would require investment advisers to use qualified custodians for clients’ digital assets. It will be unaffordable to be qualified as a custodian and certain activities such as staking and trading.