Cryptocurrency Advocacy Group Says Regulators Overstepped Authority by Sanctioning Tornado Cash

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Crypto advocacy group Coin Center is looking into challenging the U.S. Office of Foreign Assets Control (OFAC) over Tornado Cash sanctions in court.

Coin Center communications director Neeraj K. Agrawal said on Monday that the group believes “OFAC has exceeded its statutory authority by sanctioning the Tornado Cash smart contract.”

“We believe OFAC has exceeded its statutory authority by sanctioning the Tornado Cash smart contract. Coin Center is exploring a court challenge.”

In Coin Center’s analysis of the case, the non-profit argues Tornado Cash has no control over its application.

“Tornado Cash Entity does not have a property interest in the Tornado Cash Application. It has no legal right to control that Application, and, perhaps more importantly, it has no physical ability to control that application. Moreover, that application is not even ‘property’ in any reasonable sense of the word.

The Application is non-proprietary software residing simultaneously on the computers of every person around the world running the Ethereum open source client. It is no more the property of the Tornado Cash Entity than the phillips-head screwdriver in every American’s home toolbox is the property of its inventor, Henry F. Phillips.

If the Tornado Cash Application is not ‘property in which some foreign country or nation has an interest’ (50 U.S.C. §1702), then the Tornado Cash Application cannot properly be added to the SDN List or blocked under the specific powers granted by Congress to the President in IEEPA. Someone—more on whom later—should be able to challenge the designation as being made outside the bounds of the statute and therefore invalid.”

Early last week, OFAC sanctioned Tornado Cash and the U.S. Treasury Department banned US citizens from using the protocol as it was deemed a national security threat. Later in the week, the suspected developer of the crypto mixer was arrested on money laundering charges in the Netherlands.

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