In a bold move challenging the United States Treasury’s Office of Foreign Assets Control (OFAC), the Blockchain Association has extended its support to six plaintiffs in a legal battle over the sanctions imposed on Tornado Cash, a prominent crypto mixer.
Notably, the crypto advocacy group asserts that OFAC’s actions go beyond its statutory authority and constitute an arbitrary and capricious decision, violating the principles of the U.S. Constitution.
Questionable Sanctions: A Legal Standpoint
The Blockchain Association presented its stance in a compelling amicus curiae brief submitted to a U.S. appellate court on November 20. This marks the second time the association has rallied behind a group of Tornado Cash users challenging a lower court’s decision that upheld OFAC’s sanctions on the cryptocurrency mixer.
Blockchain Association senior counsel, Marisa Coppel, highlighted the need for OFAC to redirect its focus towards penalizing malicious actors rather than outright banning tools like Tornado Cash. She further argued that these are beyond OFAC’s jurisdiction.
“Recognizing Tornado Cash as a neutral tool with legitimate purposes is crucial. OFAC’s inclination to sanction the tool itself, rather than addressing its misuse by bad actors, sets a concerning precedent and oversteps its authority, potentially compromising the privacy rights of law-abiding Americans,”
Coppel stated in a press release on November 20.
Advocating Legislative Action Over Unilateral Decisions
The Blockchain Association proposed a more measured approach for OFAC. They suggested that the organization seek legislative approval from Congress before imposing bans on crypto mixers such as Tornado Cash. The association’s brief emphasized the importance of staying within legal boundaries. This is to avoid a potential overreach that could impact various internet-based tools.
“The appropriate course of action is to pursue congressional approval for supplemental authority in the context of decentralized digital assets, rather than stretching existing powers improperly. A hasty power grab could set a dangerous precedent, endangering the accessibility of numerous internet-based tools,”
the Blockchain Association asserted.
Tornado Cash: A Decentralized Enigma
Throughout its legal advocacy, the Blockchain Association has consistently highlighted Tornado Cash’s unique nature. This is operating without a designated owner or operator and capable of automatic functionality without human intervention.
OFAC initially sanctioned Tornado Cash in August 2022. It cited allegations of its use in laundering over $7 billion in cryptocurrencies since 2019. The accusations also included the laundering of $455 million stolen by the North Korea-affiliated Lazarus Group. The Blockchain Association continues to challenge these allegations, maintaining that OFAC’s actions exceed its rightful authority.