30s Summary

Coin Center is seeking to reverse a previous court decision that stated Tornado Cash benefits foreign entities, possibly violating OFAC sanctions. Jeffrey S. Hetzel, Coin Center’s lawyer, argued the software isn’t classified as property. The US government counter-argued that the token’s price increases directly benefit Tornado Cash holders. The Treasury Department froze 40 wallet addresses in 2022, suspecting links to $7 billion in illegal transactions. Coin Center subsequently sued, accusing the OFAC and the Treasury of overreaching by sanctioning the mixing service, insisting their clients used it legally. The Treasury stated using the Tornado Cash code isn’t a sanctions violation.

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Coin Center is trying to overturn a previous decision by a court in Northern Florida, which said that Tornado Cash indirectly benefits foreign people and businesses in a way that has financial interest and could face OFAC sanctions.

Jeffrey S. Hetzel, Coin Center’s lawyer, spoke to the 11th Circuit Court of Appeals, saying, “The simplest way to handle this case is to say that in our plaintiffs’ transactions, there isn’t any foreign property. The district court shouldn’t have included the word property in the law.” He goes on.

“The government says in their appeal that the software at the banned addresses is property. But this software is just lines of code that no person in the world can own, control, or change.”

The US government’s attorneys hit back and said that the Tornado Cash token (TORN) going up in price directly benefits TORN holders. They also said that withdrawal fees are a form of accrued benefits for the people who founded the protocol.

In 2022, the US Treasury Department froze over 40 wallet addresses suspected to be linked to the Tornado Cash mixing service. They argued that these people and businesses were responsible for roughly $7 billion in money laundering and other illegal transactions.

This action by the US Treasury led Coin Center to file a lawsuit in 2022 on behalf of US residents who were using the service to keep their privacy.

Coin Center’s attorneys said that the OFAC and the US Treasury were overstepping their bounds by sanctioning the mixing service, which they insisted their clients were using legally.

Not long after sanctioning Tornado Cash, the US Treasury clarified that posting or copying the Tornado Cash code online is not a violation of the sanctions. They even encouraged people who used the service before it was sanctioned to apply for an OFAC license and said that it would approve non-illegal transactions.