Court Rejects Coinbase’s Petition to Lift Sanctions on Crypto Mixer Tornado Cash
A group of investors backed by Coinbase exchange filed a motion in a federal court declaring that sanctions imposed on cryptocurrency mixer Tornado Cash by the US Treasury Department were illegal, as stated by the General Counsel of the trading platform Paul Grewal.
The plaintiffs argued that the Treasury Department exceeded its authority as the open source immutable smart contracts listed in the case were not “property” subject to sanctions, and no one, including the creators, developers or owners of native TORN tokens, held a “property interest” in these contracts.
Nevertheless, the court ruled that the DAO, which manages the mixer, is a real legal entity and it “benefits” from the smart contracts, making it an accountable entity. Despite the verdict, Paul Grewal said Coinbase will continue to support the lawsuit and intends to file an appeal.
This motion was filed in response to the US Treasury’s decision to sanction Tornado Cash in August 2022, believing that the service had laundered over $7 billion worth of cryptocurrencies, $455 million of which were allegedly associated with North Korean hacker group Lazarus Group.
Coinbase subsequently funded a lawsuit against the Treasury Department, Treasury Secretary Janet Yellen, and OFAC Director Andrea Gacki, asking to overturn the mixer sanctions.
