• The U.S. Treasury Department sanctioned Tornado Cash in August 2022
  • It alleged that the crypto mixer had laundered over $7 billion of digital assets
  • The agency eventually restricted Americans from utilizing the popular crypto mixing tool

Crypto policy trade group Blockchain Association has heavily criticized the U.S. Treasury Department, calling its move to sanction the crypto mixer tool Tornado Cash "unprecedented and unlawful."

The Washington-based trade group filed an amicus brief supporting crypto think tank Coin Center's lawsuit against the U.S Treasury Department in the U.S. District Court for the Northern District of Florida on June 3, noting that the sanctions the government agency came up with triggered "serious regulatory and constitutional questions."

The filing supported and defended Tornado Cash, the open-source software that allows anonymity on transactions conducted on the Ethereum blockchain. Moreover, it asked the court to punish the bad actors and not the cryptocurrency tool.

"It's critical to recognize that Tornado Cash is simply a tool – punishing the tool itself simply because it can be used by anyone, including bad actors, runs contrary to the values this country was founded upon," Blockchain Association CEO Kristin Smith said in a statement.

"Blockchain Association stands with Coin Center, advocating for the responsible and lawful use of blockchain technology. Regulatory actions should only be targeted at bad actors who abuse this tool for illegal purposes," she added.

In the court filing, the crypto trade group argued that the decision to sanction the crypto mixing tool mirrored the basic misunderstanding of the software and how it functioned.

Tornado Cash was the most popular privacy-protecting cryptocurrency tool on Ethereum until sanctions were imposed on it by the Office of Foreign Asset Control (OFAC).

Furthermore, the amicus brief, which is a legal document provided to a court of law containing advice or details surrounding a case by a person or organization not directly involved in the lawsuit, underlined Tornado Cash's crucial role in protecting the privacy of crypto asset holders. It then cited the growing number of Americans owning digital assets, with 29% of them planning to buy or trade assets.

The legal filing also acknowledged that while the crypto mixing tool could be misused by bad actors for illegal purposes, it was mainly used for legitimate and valuable reasons.

Moreover, the Blockchain Association slammed the OFAC for imposing sanctions on Tornado Cash that were beyond its statutory authority. It was allegedly the product of the agency's "arbitrary-and-capricious decision-making."

The U.S. Treasury Department sanctioned Tornado Cash in August 2022, accusing it of laundering over $7 billion of digital assets. It eventually restricted Americans from utilizing the popular crypto-mixing tool.

Ethereum co-founder Vitalik Buterin tweeted in the same month that he had used Tornado Cash in the past to donate to Ukraine, which is an example of a valid need to exercise financial privacy through crypto mixing tolls.

"I'll out myself as someone who has used TC to donate to this exact cause," Buterin said, apparently in response to Counterfactual co-founder Jeff Coleman, who had raised the issue of using Tornado Cash for donations in times of war.

In October of last year, Coin Center sued the government agency for sanctioning Tornado Cash and claimed that the software had legitimate use cases.

banks vs crypto
banks vs crypto