Is the US Treasury within its rights when it bans any association with the Tornado Cash protocol, even for legal uses? No, according to an American lobbying group, CoinCenter. The latter is suing the American institution, fearing that this type of practice will become commonplace. A look at the issue
US Treasury sued over Tornado Cash
Yesterday, we learned that the Bittrex exchange platform had to pay a fine of $53 million to two sub-departments of the US Treasury. Today, the opposite is happening: the think tank CoinCenter has decided to take the institution to court. The reason? It believes that the Treasury has abused its rights by prohibiting the use of Tornado Cash.
CoinCenter’s executive director, Jerry Brito, announced the move on Twitter. The Office of Foreign Assets Control (OFAC) in particular is the target of this complaint:
1/ Today Coin Center filed suit in federal district court against OFAC challenging its authority to sanction Tornado Cash immutable smart contracts.
– Jerry Brito (@jerrybrito) October 12, 2022
CoinCenter believes that OFAC did not have sufficient authority to sanction the smart contracts associated with Tornado Cash. According to the group, there is a risk that the practice could spread to entire protocols:
“We are fighting not only for privacy rights, but also against the fact that if this precedent is set, OFAC could add entire protocols like Bitcoin or Ethereum to its list of sanctions in the future. This would immediately ban them without the process including the public in any way. “
Has the Treasury gone too far?
This is indeed the major question raised by the Tornado Cash case. Is it fair that users concerned about their privacy are cut off from this type of service, because it can also be used by malicious people? The question is of course broader than crypto-currencies.
CoinCenter intends to fight to preserve these privacy options, and to go to the Supreme Court if necessary. The group sees the right to anonymity as essential, and the implementation of global sanctions as a mistake:
“Privacy is a normal thing, and when we win our case, using Tornado Cash will become normal again. “
This new case is in any case particularly symbolic. At a time when regulators are increasingly surrounding the cryptocurrency ecosystem with rules, the question of privacy arises. A particularly telling example is MiCA in Europe: service providers will soon be forced to report the vast majority of the transactions they process.
However, the ideology of cryptocurrencies is largely based on an evolution of this thinking, which of course conflicts with large institutions such as the Treasury. The coming years should therefore see some extremely important milestones within the ecosystem.
