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In a significant legal development, the Coin Center lawsuit against the U.S. Treasury’s sanctions on Tornado Cash continues to highlight the tension between privacy and regulation in the crypto sphere.
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The ongoing appeal underscores the broader implications for U.S. cryptocurrency users, emphasizing the need for clarity in regulations surrounding privacy-enhancing technologies.
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As legal counsel for Coin Center, Jeffrey S. Hetzel, stated, “The software is non-proprietary lines of code that no one on the planet can own, control, or alter.”
The Coin Center lawsuit sheds light on the regulatory challenges facing privacy in crypto, as the appeal over Tornado Cash sanctions unfolds.
2022 Coin Center Lawsuit: A Fight for Crypto User Privacy
The legal battle initiated by Coin Center revolves around controversial sanctions imposed by the U.S. Treasury in August 2022. These sanctions encompassed over 40 wallet addresses tied to Tornado Cash, a mixing service purportedly involved in facilitating approximately $7 billion in illicit activities.
Coin Center’s lawsuit claims that the Treasury Department’s actions infringed upon the rights of U.S. citizens utilizing Tornado Cash for legitimate privacy reasons. The organization’s legal team argued that the Office of Foreign Assets Control (OFAC) exceeded its jurisdiction in implementing these sanctions, as the Tornado Cash platform is predominantly used for lawful transactions.
In response to the sanctions, the U.S. Treasury later clarified that the mere act of publishing or replicating Tornado Cash’s code did not constitute a violation of sanctions, thus creating a potential loophole for those who utilized the platform before its designation as a restricted service.
Analyzing the Legal Arguments in the Coin Center Case
The intricate legal arguments presented during the appeal reveal significant complexities related to the definition of property in the context of digital assets. Coin Center contends that the transactions conducted by its clients do not involve foreign property, a point underscored by Hetzel’s statement regarding the nature of Tornado Cash’s code.