Coin Center is suing OFAC over its Tornado Cash sanction

OFAC does not have the authority to sanction a smart contract and Americans have a right to use privacy tools

Privacy is not the default on Ethereum. If you do your job on Ethereum, your co-workers can see your salary. If you donate to a political cause on Ethereum, the enemies of your cause can see your contribution. If you are a celebrity on Ethereum, your fans see not just your publicized activities but also your private personal accounts. Privacy is normal for a salaried employee, a charitable donor, even a celebrity, but privacy is not normal if you do these things on Ethereum unless you use Tornado Cash. And last August, the U.S. Treasury unilaterally and extralegally made it a crime for Americans to use Tornado Cash.

Today, Coin Center, along with a group of normal privacy-seeking workers, donors, activists, and public figures, filed a lawsuit against the Treasury Department to keep privacy normal, to delist Tornado Cash privacy tools from sanctions, and to enjoin Treasury from enforcing against ordinary Americans exercising their self-evident and basic rights to privacy.

Our lawsuit makes four claims. First, Congress gave the president very specific powers when it passed the International Emergency Economic Powers Act upon which Treasury’s sanction rules are based: sanctions can block U.S. persons from transacting with a foreign person or majority foreign entity or the property of that person or entity. When we or our co-plaintiffs use the Tornado Cash tools, we do so as normal, privacy seeking Americans. We do not engage in any transactions with any foreign person or entity or their property. Instead, we are using immutable and widely available software on the Ethereum blockchain to move our own valuables from one place in cyberspace that is fully under our control to another place that we also control. At no point are we relying on any third party for these transactions and at no point are we transacting with a sanctioned person. Plainly, given the specific powers granted to the Treasury Department by Congress, these are not the kinds of activities that can be censored or blocked. The Tornado Cash sanction was, therefore, made in excess of statutory authority and must be set aside.

Second, even Treasury’s own regulations and past executive orders limit the applicability of sanction controls to transactions with persons, entities, or their property. The Tornado Cash sanction was made without statutory and also without regulatory authority. It was made contrary to law.

Third, in sanctioning Tornado Cash tools, the Treasury failed to consider the collateral consequences of its actions or manifest any awareness of, or justification for, their significant deviation from previous sanctions policies. Their actions were arbitrary and capricious. Since the sanction, Americans have had money trapped in a smart contract without any due process; they’ve been attacked by malicious continued use of the smart contract that saddles them with indefinite reporting requirements or else criminal penalties through no fault of their own. Meanwhile, the Treasury has issued statements that directly contradict their own rules, and scant public clarity has been offered in the face of real public confusion and harm.

Fourth, Americans have had their associational activities chilled as once private donations to political causes must now be made public on chain. Our American system relies on certain essential and self-evident rights. Among them, that you can meet with others to petition the government and contribute to groups and organizations that will further those advocacy efforts. Key to our freedom of association is the right to make these donations in private, to not be forced to disclose to the government or any third party a list of the people who believe in your cause. Coin Center, among many non-profits, relied upon Tornado Cash for private donations. Another of our co-plaintiffs relied upon Tornado Cash to organize substantial support for the defense of Ukraine. Subjecting these transactions to public scrutiny would not only chill the protected activities of donors, it would put those donors and activists in real danger of Russian reprisals.

For all these reasons and more, Coin Center opposes Treasury’s extra-legal usage of its sanctions authority to strip U.S. persons of access to software tools that are necessary to protect our basic privacy needs as we go about our lives.

We are grateful to our co-plaintiffs in this case, Patrick O’Sullivan, a software developer who depended on Tornado Cash for his financial privacy, David Hoffman of Bankless who was the victim of a ‘dusting’ attack, and the anonymous operator of the 688th Support Brigade, which relied on Tornado Cash to gather funds to purchase equipment for Ukrainian soldiers. We’re also grateful to our legal team from Consovoy McCarthy and Abraham Sutherland.

Privacy is normal, and when we win our lawsuit, using Tornado Cash will be normal again.

A direct download of this complaint is available here. See all court filings here