OFAC Sanctions on Tornado Cash Challenged in Court

The Office of Foreign Assets Control (OFAC) included Tornado Cash on its list of “Specially Designated Nationals or Blocked Persons” in November of the prior year.

Following that, Coin Center filed a legal challenge against Janet Yellen in retaliation for the sanctions imposed by OFAC on the cryptocurrency tumbler; nevertheless, that lawsuit has been dismissed from court.

Coin Center contended in its lawsuit that the sanctions were not intended for the addresses associated with the core non-upgradable smart contracts comprising Tornado Cash.

This argument was predicated on the impracticability of upgrading these contracts.

One contention centered on the impossibility of amending these contracts at this juncture; consequently, the inquiry concerned whether the entity had relinquished any interest in them.

Nonetheless, the court determined that “TORN holders continue to possess an indirect beneficial ‘interest’ in the utilization of the core software tool and the entire service because such utilization enhances the value of the TORN.”

The court determined that “the designation of Tornado Cash does not prohibit Plaintiffs from making political contributions or expenditures, nor does it prohibit organizations from accepting anonymous donations.”

Additionally, the court rejected the contention that the First Amendment safeguarded Tornado Cash.

Neeraj Agrawal, the communications director for Coin Center, took to X to convey the organization’s discontent and provide an update on its intended appeal of the ruling.

Concerned that Tornado Cash is merely the latest installment in an ever-expanding financial panopticon, proponents of transactional privacy have identified this case as a turning point in their struggle.