Blockchain Association submitted an amicus brief concerning OFAC's sanctions on the privacy-preserving software named Tornado Cash. The sanctions imposed by OFAC represent the initial instance in which the agency has targeted computer software itself, as opposed to focusing on the individuals or entities misusing such tools. This groundbreaking action raises concerns among various stakeholders regarding its potential ramifications on privacy and legality.
The first point of discussion revolves around Blockchain Association's official standpoint. According to a press release from Blockchain Association, Blockchain Association filed an amicus brief in the 5th Circuit appeal of Van Loon v. Treasury. It claims that "OFAC’s actions are unlawful, exceed their statutory authority, and are arbitrary and capricious, running contrary to the Constitution."
Further expressing these concerns is Marisa Coppel, Senior Counsel at Blockchain Association. According to Marisa Coppel, Blockchain Association Senior Counsel, "OFAC’s action sets a dangerous new precedent that drastically exceeds their authority and jeopardizes law-abiding Americans’ right to privacy. OFAC must see Tornado Cash for what it is: a tool that can be used by anyone. Rather than sanctioning a tool with a lawful purpose, OFAC should remain focused on the bad actors that misuse such tools. We’re encouraged the Fifth Circuit will have the chance to weigh in on this critical case."
On the other hand, there are serious reasons provided by U.S. Department of Treasury for issuing these sanctions. According to an article from the U.S. Department of Treasury, the OFAC sanctioned the virtual currency mixer called Tornado Cash because of its use in money laundering. More than $7 billion dollars have been laundered since its creation in 2019. The Lazarus group, a state-sanctioned hacking group through the Democratic People's Republic of Korea, stole $455 million which to date is the largest virtual currency heist.
The Secretary of Treasury provides additional insights into the matter. According to Secretary of the Treasury for Terrorism and Financial Intelligence, Brian E. Nelson, "Treasury is sanctioning Tornado Cash, a virtual currency mixer that launders the proceeds of cybercrimes, including those committed against victims in the United States. Despite public assurances otherwise, Tornado Cash has repeatedly failed to impose effective controls designed to stop it from laundering funds for malicious cyber actors on a regular basis and without basic measures to address its risks. Treasury will continue to aggressively pursue actions against mixers that launder virtual currency for criminals and those who assist them."