Lawyers argue that OFAC’s ruling violates the US Constitution

Coin Center going to challenge the decision to ban Tornado Cash

16.08.2022 - 09:00


3 min

What’s new? Lawyers of Coin Center, a non-profit crypto policy think tank, are preparing to challenge the decision of the US Office of Foreign Assets Control (OFAC) to put cryptocurrency mixer Tornado Cash on the sanctions list. Human rights advocates argue that the ruling violates the US Constitution by violating the free speech amendment. Coin Center’s executive director Jerry Brito and research director Peter Van Valkenburgh noted in their blog post that OFAC also “has not adequately acted to mitigate the foreseeable impact its action would have on innocent Americans.”

Coin Center Blog

What else did the Coin Center add? Representatives of the organization compared the Tornado Cash case to the banning of the crypto mixer Blender. OFAC imposed restrictions against it on May 6, 2022. In both cases, the reason for placing services on the sanctions list was their use for money laundering, including by the hacker group Lazarus from the DPRK.

The Coin Center notes that there was a specific legal entity behind Blender that could be sanctioned. But with regard to Tornado Cash, this cannot be done, since it is a decentralized organization that is not run by a specific individual.

Lawyers are led to that there should be a specific person associated with the sanctions who can change the business strategy, thereby removing the restrictions from oneself.

But despite this point of view, law enforcement authorities in the Netherlands arrested an alleged developer of the crypto mixer on August 12. He is suspected of money laundering and hiding financial information. Later, The Block’s journalists reported that the detained developer is Tornado Cash creator Alexey Pertsev, his wife Ksenia Malik confirmed this.

To comply with the authorities’ requirements, some crypto projects, including the dYdX exchange and the DeFi platform began blocking users whose addresses are associated with Tornado Cash. Even TRON blockchain founder Justin Sun was temporarily blocked by the decentralized protocol Aave for a 0,1 ETH deposit from an unknown user.

Many representatives of the crypto community spoke out against the sanctions. For example, Stefan George, co-founder of Gnosis Chain, an Ethereum sidechain, said that writing open-source software should be recognized as “an expression of free speech.” Uniswap protocol founder Hayden Adams criticized the banning of the entire service because of the actions of individual attackers and called the precedent a threat to freedom of speech and privacy. The developers of Zcash from Electric Coin Company also noted that this precedent could negatively affect the civil liberties of Americans.

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