The largest US cryptocurrency exchange, Coinbase Global Inc., assisted in organizing and is funding a lawsuit against the Treasury Department for its restrictions on coin mixer Tornado Cash.
Six people, which include two Coinbase employees, filed the lawsuit on Thursday, alleging that Treasury exceeded its authority by not stopping financial transactions that benefited foreign terrorists.
It asserts that through the use of a cryptocurrency service that provides enhanced privacy and security, the department may have unintentionally captured law-abiding Americans engaging in legitimate digital commerce.
Coinbase employees state that the sanctions affected law-abiding customers
“None of the plaintiffs is a terrorist or a criminal” in a court filing in Waco, Texas. “No one encourages terrorism or unlawful activity. Money is never hid. Each is a citizen of the United States who merely desires to carry out the entirely legal activity in private.
Attorneys for the Tornado Cash customers claimed in the complaint
The Office of Foreign Assets Control (OFAC) of the Treasury claimed on August 8 that the service Tornado, which makes it more difficult to track coins, has laundered more than $7 billion in cryptocurrencies since its inception in 2019.
The organization approved Tornado Cash’s cryptocurrency wallets as well as the related smart contract code.
According to Coinbase’s chief legal officer of the Northern District of California, Paul Grewal, OFAC’s action is probably unprecedented and could cripple the cryptocurrency sector, which is largely based on smart contracts.
In an interview, Grewal stated that “neutral technologies and tools are not within the sanctions law as has been written by Congress.” “A highway shouldn’t be shut down just because armed robbers used it. Coinbase is following the sanctions, according to the company, and we felt obliged to take action.
Requests for comment on the lawsuit were not answered by either the Treasury Department or the Justice Department.
Brian Armstrong, the CEO of Coinbase, had hinted at legal action and expressed opposition to the sanctions in his tweets and retweets.