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    Home » Crypto News » Coin Centre May Bring Legal Action Against OFAC for Tornado Sanctions

    Coin Centre May Bring Legal Action Against OFAC for Tornado Sanctions

    Author: Andrew Throuvalas

    Last Updated Aug 15, 2022 @ 19:55

    Coin Centre makes the case for why sanctioning Tornado Cash sets an entirely new legal precedent compared to sanctioning other mixers.

    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. 

    ADVERTISEMENT

    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. 

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    About The Author

    Andrew Throuvalas
    More posts by this author

    Andrew is a content writer with a passion for Bitcoin. He became familiar with Bitcoin back in 2013, but began diligently studying the blockchain technology and its economic implications in 2017. Ever since, he’s believed in the network’s power to replace the current global monetary system, and provide financial freedom to billions worldwide.
    Contact: Medium | LinkedIn | Twitter

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