Tornado Cash lawsuit judge sides with US Treasury in motions for summary judgment

A federal judge in Texas has sided with america Division of the Treasury by granting a movement for summary judgment in a lawsuit regarding Tornado Cash introduced by six people backed by crypto change Coinbase.

In an Aug. 17 submitting in the U.S. District Courtroom for the Western District of Texas, Judge Robert Pitman denied a movement filed in April by plaintiffs Joseph Van Loon, Tyler Almeida, Alexander Fisher, Preston Van Loon, Kevin Vitale and Nate Welch requesting partial summary judgment in a case over controversial mixer Tornado Cash. Pitman, nonetheless, granted the same movement filed by the U.S. Treasury Division.

“This case is about Tornado Cash — however the events disagree on the way to characterize Tornado Cash,” mentioned Pitman. “Plaintiffs argue that [Treasury’s Office of Foreign Assets Control’s] designation of Tornado Cash exceeds the Division’s statutory authority over overseas nationals’ pursuits in property and violates the Free Speech Clause. […] The federal government, however, argues that Tornado Cash is an entity that could be designated and that it has a property curiosity in the sensible contracts.”

In August 2022, the U.S. Treasury Division’s Workplace of Overseas Property Management (OFAC) added Tornado Cash to its Specifically Designated Nationals listing. Many crypto customers criticized the transfer as an overreach of authority. The six aforementioned people, with the assist of Coinbase, filed a lawsuit in opposition to the federal government division in September 2022, looking for to reverse the designation. Crypto advocacy group Coin Heart followed with its own suit in October.

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Pitman largely dismissed the plaintiffs’ arguments, ruling that Tornado Cash was “an entity that could be designated per OFAC rules,” and its addition to an inventory of sanctioned entities didn’t exceed Treasury’s statutory powers and was “not plainly inconsistent with its rules.” The ruling claimed builders may analyze and train the code behind the mixer however not “execute it and use it to conduct cryptocurrency transactions.”

Coinbase chief authorized officer Paul Grewal reacted to the judge’s choice on X (previously Twitter), saying the change supposed to assist an attraction to the Fifth Circuit.

Rights are hardly ever secured on a path that’s all the time ⬆️ and ➡️. We proceed to consider Plaintiffs’ problem to OFAC’s Tornado Cash motion is correct. We’ve all the time identified that Fifth Circuit overview is required to resolve these points, and we proceed to assist them on attraction. 1/4 pic.twitter.com/Tz8FkFCSf2

— paulgrewal.eth (@iampaulgrewal) August 17, 2023

Coinbase is at the moment embroiled in a civil case with the U.S. Securities and Alternate Fee (SEC) filed in June. Although the OFAC and SEC circumstances are considerably completely different, Grewal has made similar arguments in each lawsuits, claiming in the latter the fee’s enforcement motion in opposition to the crypto change represented an overreach in its authority granted by Congress.

Journal: Tornado Cash 2.0: The race to build safe and legal coin mixers