- Coinbase had backed the plaintiffs in their complaint against the department.
- Tornado Cash is accused of laundering $7B worth of cryptos since 2019.
A federal court yesterday ruled against a motion filed by Coinbase and other crypto industry titans arguing that US Treasury sanctions against crypto mixer Tornado Cash went too far.
Six plaintiffs, including two Coinbase personnel, had their motions for summary judgment denied by Judge Robert Pitman of the US District Court for the Western District of Texas after they claimed the Treasury had overstepped its bounds in an effort to halt financial transactions that aided foreign terrorist organizations.
Furthermore, Coinbase had backed the plaintiffs in their complaint against the department, which claimed its actions had an adverse impact on law-abiding citizens utilizing the private business. The court, however, sided with the US Treasury.
Money Laundering Charges
Since the crypto mixer’s debut in 2019, the Office of Foreign Assets Control (OFAC) of the Treasury has accused Tornado Cash of being involved in laundering over $7 billion worth of cryptocurrencies. Moreover, the agency’s reaction was to ban smart contracts and ban crypto wallets associated with Tornado Cash.
In early 2023, the digital asset analysis firm Chainalysis said that it had linked North Korean cybercrime organizations to the theft of about $2 billion worth of cryptocurrencies in 2022. In addition, according to Chainalysis, these organizations rely extensively on Tornado Cash to launder their illicit gains.
The judge likened smart contracts in his latest order to automated vending machines and subjected it to be within the meaning of the regulation. The court said that the Treasury Department had designated an entity, which includes the decentralized autonomous organization (DAO) that runs the crypto mixer, and that the argument that Tornado Cash is not an actual entity was not compelling.
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