• Coin Center, a crypto think tank, has sued OFAC regarding penalties against Tornado Cash which is a privacy mixer.
  • According to their opinion, Americans are free to utilize privacy tools as well as OFAC has no power to regulate smart contracts.
  • Coinbase is an openly traded American company that runs a the crypto exchange, is in support of this by establishing Coin Center.

This month this month, earlier this month, the Coin Center, a non-profit organisation that focuses on policies for cryptocurrency has announced that it will be seeking to sue OFAC over its reprimands against Tornado Cash, a non-custodial open-source, decentralized, and fully open source cryptocurrency tumbler.
Coin Center reiterated its cryptocurrency-forward mission on October 12, stating that Americans can use privacy mechanisms and OFAC has no jurisdiction over smart contracts.

The second lawsuit comes from Coin Center in 2022

In June, the advocacy group filed suit against in the Treasury Department for allegedly violating the Constitution through unconstitutional surveillance measures.

The lawsuit argued that there are legitimate reasons for tools to enhance privacy such as Tornado Cash as well as OFAC’s sanctions for the privacy mixer, a program that pool funds to hide the person who sent a transaction and now makes these people’s the entire history of transactions to anyone looking at the network’s data.

Four key claims in this lawsuit

1.Treasury’s sanctions laws are based on the International Emergency Economic Powers Act that was passed by Congress which gave the president specific powers. Sanctions can hinder U.S. citizens from transacting with foreign persons as well as the vast majority of foreign companies, or their property.
2.Sanctions control limits the application that sanctions can be applied to that involve individuals, companies and their property under the Treasury’s rules, as well as earlier orders of the president (Old ones) which makes the Tornado sanctions “contrary to the law.”
3.Coin Center characterized Treasury’s actions as “arbitrary and capricious” particularly noting how the Treasury didn’t consider the collateral effects in punishing Tornado Cash instruments, and failed to provide a rationale for why its actions were significantly different from the previous sanctions guidelines.
4.Private donations are one of these rights, which is fundamental and are a given within the “American system.”

A new round of opposition to the crypto mixer’s sanction

In the course of this year, Coin Center sued Treasury for the tax reporting requirement adopted as part of the infrastructure bill passed last year is in violation of the Constitution. When receiving over $10,000 of cryptocurrency taxpayers are required to be required to report personal identifiable information, such as Social Security numbers. (responses by the Federal government must be received November. 7th and 2022.)

Tornado Cash is the subject of a second lawsuit that is funded by the crypto exchange Coinbase.

Coinbase filed a lawsuit last month, claiming that OFAC overstepped its legal authority when it proclaimed the open source project an appropriate sanction.

The defendants are Treasury Secretary Janet Yellen and OFAC Director Andrea Gacki. Three other plaintiffs are linked to the lawsuit including Software developer from Florida Patrick O’Sullivan, New York-based investor David Hoffman, and an unknown Ukraine fan.

Hoffman was smacked with a small amount Ethereum Hoffman was dusted with a small amount of Ethereum, and OFAC made a few statements in this regard.

“Ethereum users like Mr. Hoffman have no ability to reject incoming transfers. So the criminalization of Tornado Cash empowered someone else to implicate Mr. Hoffman and force reporting obligations on him by causing him to receive an asset from a sanctioned entity, and it has licensed anyone else who wishes to harass or inconvenience Mr. Hoffman to continue to send crypto assets through Tornado Cash to Mr. Hoffman’s publicly known addresses, each time triggering potential liability and reporting obligations.”

Following all this, Treasury has seemingly decided not to comment on the situation because they are aware that everything they learn from them could use against them at the courtroom.