- Tornado Cash backers have lost in court.
- The crypto mixer continues to stay on the U.S. sanction list.
- Coinbase throws support behind the backers.
Crypto mixer Tornado Cash has suffered another blow in court after Judge Robert Pitman denied a motion filed by enjoined participants seeking to file an oral argument that the U.S. Department of Treasury overreached its mandate in sanctioning the company.
In a court order dated August 17, the judge also turned down a request by the Plaintiffs to be given a partial summary judgment of the case but instead granted the same to the U.S. Treasury’s Office of Foreign Asset Control (OFAC).
Tornado Cash Is an Entity
The Plaintiff side based their argument on various grounds, one being that Tornado Cash is not an entity. In response to this ground, the judge found it unconvincing, adding that the crypto mixer is, in fact, an entity and may be subject to that designation per OFAC regulations.
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The judge also noted that the designation of Tornado Cash as an entity included the mixer’s decentralized autonomous organization (DAO).
“The DAO is an entity unto itself that, through its voting members, has demonstrated an agreement to a common purpose. As the government notes, the structure is not unlike that of stockholders of a corporation who may not intend to vote in a shareholder meeting without this affecting the structure of the entity,” read the court order.
Coinbase Shows Solidarity
The Plaintiffs were represented by six individuals, among them two Coinbase employees. Following the court’s decision, Coinbase chief legal officer Paul Grewal took to Twitter and revealed that the exchange would support the Plaintiffs to file an appeal for a Fifth Circuit review.
The Treasury’s OFAC sanctioned wallets connected to Tornado Cash in August 2022, following allegations that the crypto mixer laundered proceeds of cybercrime, estimated to be over $7 billion since its inception in 2019.
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Are regulators after crypto mixers? Find out what happened in this case:
Crypto Mixers Under Fire: Pertsev Freed from Dutch Detention
Coinbase has been vocal about the lack of a clear regulatory framework for crypto firms:
Coinbase’s Legal Chief Slams SEC’s Lack of Guidance for Crypto Firms
