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Coin Centre – a non-profit crypto policy think tank – is considering a court challenge against the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC).
The challenge is a response to the OFAC’s recent addition of privacy protocol Tornado Cash to its Specially Designated Nationals And Blocked Persons (SDN) List. Coin Centre has provided extensive legal analysis arguing that this exceeds the office’s statutory authority.
Why Was Tornado Sanctioned?
Per the think tank’s statement on Monday, the OFAC’s action presents a potential violation of Americans’ constitutional rights to free speech and due process. Furthermore, it alleges that the OFAC did not act appropriately to mitigate the impact these sanctions would have on ordinary Americans.
“We intend to work with other digital rights advocates to pursue administrative relief,” said Coin Centre. “We are also now exploring bringing a challenge to this action in court.”
The OFAC levied its sanctions against Tornado Cash last week, drawing widespread concern from crypto community leaders about the implications they could have for the entire digital asset sector. Concerns swelled when a 29-year-old developer behind the protocol was arrested in Amsterdam just days later.
By comparison, Coin Centre noted that the department’s sanctions against Blender.io – another cryptocurrency mixer – drew no response from the industry back in May. Both Blender.io and Tornado were flagged by the department due to their ties with North Korean entities, including the Democratic People’s Republic of Korea (DPRK) and the hacker Lazarus Group.
Sanctioning People VS Code
The non-profit argued that sanctioning Blender made sense, given that it is a “person or group of persons” that provides Bitcoin mixing services. By contrast, Tornado Cash does not necessarily represent a “person” responsible for mixing customers’ coins but is simply an open-source code.
Specifically, the Tornado Cash mixer smart contract was created such that it cannot be altered, once deployed. Therefore, any people responsible for deploying it cannot choose which customers to serve, and which ones to deny, whether they’d like to or not. Therefore, there is a clear distinction between Tornado Cash as an “entity” and as an “application” – unlike Blender.
The Financial Crimes Enforcement Network (FinCEN) – another arm of the Treasury Department – drew the same distinction between “providers of anonymizing services” and “anonymizing software providers” in its May 2019 guidance document on virtual currency business models.
“FinCEN’s guidance goes to show that what we are suggesting here is not novel or strange,” added Coin Centre.
The post Coin Centre May Bring Legal Action Against OFAC for Tornado Sanctions appeared first on CryptoPotato.
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