Group Backed by Coinbase Loses Lawsuit Against US Treasury's Tornado Cash Sanction

Group Backed by Coinbase Loses Lawsuit Against US Treasury's Tornado Cash Sanction

A six-people group lost a lawsuit that supports Tornado Cash. They believed the US Treasury Department overstepped its authority when sanctioning Tornado Cash last year and required the court to overturn the sanction. However, their motion was denied by Judge Robert Pitman.

A year ago, the Office of Foreign Asset Control (OFAC) under the US Treasury Department added Tornado Cash and all of its Ethereum addresses to the Specially Designated Nationals list (SDN List). Afterward, a group of six people, including two Coinbase employees, started a lawsuit against the US Treasury and was funded and supported by Coinbase.

The group argued that the US Treasury sanctioning an open-source software exceeded its authority and violated the free speech clause of the US Constitution's First Amendment. But Judge Pitman believed that Tornado Cash was an actual entity in itself, which had a property interest in its smart contracts.

After the group lost the lawsuit, Coinbase's chief legal officer Paul Grewal said on X that the exchange will continue to support them on appeal.

Related: Coinbase-Backed Plaintiffs File Motion to Overturn Sanctions on Tornado Cash by US Treasury

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