Blockchain Association Challenges OFAC’s Tornado Cash Sanctions

Six plaintiffs have received additional backing from the Blockchain Association in their lawsuit against the United States Treasury Office of Foreign Assets Control (OFAC) for sanctions against the cryptocurrency mixer Tornado Cash.

The crypto advocacy group contended in an amicus curiae brief submitted to a U.S. appellate court on November 20 that OFAC’s sanction of the privacy protocol was not only unconstitutional but also exceeded its statutory authority, being “arbitrary and capricious” in nature and a violation of the U.S. Constitution.

The Blockchain Association has submitted its second amicus brief in support of a cohort of Tornado Cash users contesting a lower court’s decision that upheld OFAC’s inclusion of the cryptocurrency aggregator in its list of sanctioned entities.

Marisa Coppel, senior counsel for the Blockchain Association, emphasized in a statement dated November 20 that OFAC should prioritize sanctioning poor actors over outright banning tools, which she asserts has no authority.

Coppel stated, “OFAC must recognize Tornado Cash for what it is: a tool that anyone can use.” Instead of penalizing a tool that serves a legitimate purpose, OFAC should focus its attention on the malicious actors who exploit said tools.

“OFAC’s action sets a dangerous new precedent that drastically exceeds their authority and jeopardizes law-abiding Americans’ right to privacy.”

The Blockchain Association recommended in its brief that OFAC adhere to legal requirements by requesting congressional approval before prohibiting cryptocurrency mixers like Tornado Cash.

“In the context of uniquely decentralized digital assets, the appropriate remedy is to seek legislation from Congress that would provide supplemental authority, not to stretch its existing authorities improperly,” the statement continued.

“Such a power-grab would be a slippery slope that could threaten all manner of internet-based tools that have heretofore been freely available.”

Long ago, the Blockchain Association established that Tornado Cash operates autonomously and does not require the intervention or support of a human.

OFAC initially authorized Tornado Cash in August 2022. Since 2019, it has been alleged that groups and individuals have used the mixer to launder over $7 billion in cryptocurrencies, including the Lazarus Group, which is affiliated with North Korea, and allegedly stole $455 million of that amount.