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Tornado Cash: Coinbase funds lawsuit against US Treasury Department

 


Coinbase is funding a lawsuit against the US Treasury over the sanctioning of Ethereum-based crypto mixer Tornado Cash. According to the exchange's chief legal officer, there's a lot more at stake than just the sanctions.


The lawsuit against the US Treasury Department currently includes six plaintiffs, including several Coinbase employees. They want to stand up for the “right thing”.


Paul Grewal, Coinbase's chief legal officer, told CNBC that sanctioning a code-based platform is creating a controversy that goes well beyond Tornado Cash.


“We see a much bigger problem with this decision than the sanction itself: the US Treasury Department is setting a dangerous precedent. If this code can be sanctioned without legal restrictions, every technology , tool, and system is in danger of suffering the same fate .”


Treasury Department blacklists Tornado Cash Mixer

The Treasury Department banned American users from using Tornado Cash on Aug. 8 and blacklisted the crypto service . Citing its involvement in money laundering and anti-national security activities, the Department added the platform to its list of Specially Designated Nationals . This list contains all persons, organizations and wallet addresses associated with the service. This automatically bans American citizens from interacting with Tornado Cash and related Ethereum wallets. 


According to a ministry official, people have laundered over $7 billion worth of cryptocurrencies through the mixer:


“Tornado Cash was a focal point for cybercriminals looking to launder their crime proceeds. This service has enabled hackers, even those currently under US sanctions, to launder the proceeds of their cyber crimes. This allowed them to disguise the origin and transfer of this illegal virtual currency.”


Technology now also needs legal protection

Even if a platform is misused for illegal purposes, it is not fair to prosecute them. The platform helped other users with legal issues, emphasizes Coinbase.


"Each and every one of these plaintiffs is an American who simply wants to pursue a perfectly legal occupation," the complaint reads.


One of the plaintiffs, senior security risk analyst at Coinbase, noted that Tornado Cash helped fundraise for the Ukraine conflict . The donors wanted to remain anonymous for fear of being attacked by hackers linked to Russia. 


Ethereum co-founder Vitalik Buterin shared that he also used Tornado Cash to donate to Ukraine . 


"I come out as someone who used TC [Tornado Cash] to donate to Ukraine," Buterin wrote.


“In any case, the law should respect the distinction between people and codes. If we allow this disregard, more laws could be bent and used against crypto in a variety of ways,” Grewal added.


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