- The U.S. sanction on Tornado Cash is an infringement on free speech, according t0 plaintiffs challenging the sanction.
- They said the U.S. Treasury has only provided three examples of money laundering from among millions of transactions.
In a recent court filing, the plaintiffs appealing the U.S. sanction on Tornado Cash argued that the Department of Treasury sanction issued against the privacy protocol is an infringement on free speech.
The plaintiffs claim that the sanction against Tornado Cash breaches the International Emergency Economic Powers Act (IEEPA) by failing to appropriately identify a foreign “national” and “property.”
They also failed to demonstrate sanctionable interest in immutable, open-source smart contracts.
The defendants argued that the Treasury’s definition of Tornado Cash as an “unincorporated association” fails to fulfil the requirements for such an organization.
It was also noted that if the treasury’s sanctions get authorised, they will violate the First Amendment due to their vast scope.
The court statement said,
“The Department’s action violates the First Amendment’s free speech clause as it prohibits Plaintiffs and thousands of other law-abiding American citizens from interacting with open-source code to engage in a wide range of speech protected by the First Amendment.”
Was Tornado Cash an instrument of money laundering?
The plaintiffs claimed in the court filing that the evidence against Tornado Cash for money laundering is weak.
They added that the Treasury has only provided three examples of money laundering from millions of transactions.
However, Tornado Cash’s DAO was the target of a recent vote fraud hack, and the perpetrator has begun to move the funds via the organization.
Meanwhile, its creator Alexey Pertsev is still on trial in the Netherlands on the charges of money laundering.
Pertsev has now won the right to cross-examine Chainalysis, a blockchain intelligence company that is frequently mentioned as a source of on-chain evidence during court proceedings.
While Tornado Cash has been used by hackers to conceal their transactions, law enforcement experts have previously warned that this does not necessarily make it complicit in money laundering.
The plaintiffs are Coinbase employees Tyler Almeida and Nate Welch, Prysmatic Labs co-founder Preston Van Loon, GridPlus engineer Kevin Vitale, Ethereum proponent and angel investor Alex Fisher and former Amazon engineer Joseph Van Loon.
Crypto exchange Coinbase is funding the effort to challenge the sanction.
