In a legal battle between pro-crypto groups and regulators, the Blockchain Association and the DeFi Education Fund have joined forces with other crypto advocates to support Coin Center’s lawsuit against the United States Treasury.

The focus of this lawsuit is the imposition of what these groups deem unlawful sanctions on Tornado Cash, a popular crypto mixer.

Unprecedented and Unlawful Sanctions:

The amicus brief filed by the Blockchain Association and the DeFi Education Fund on June 2, 2023, seeks the removal of US sanctions against Tornado Cash.

The advocates argue that the sanctions imposed by the Treasury’s Office of Foreign Assets Control (OFAC) are both unprecedented and unlawful.

They claim that the OFAC lacks the authority to sanction software like Tornado Cash, as such sanctions have not been imposed in the past. Moreover, they assert that the OFAC’s jurisdiction over people and property does not extend to decentralized protocols.

Violation of Rights:

The advocates contend that the sanctions on Tornado Cash infringe upon the rights to free speech and due process. They argue that these sanctions effectively restrict Americans’ ability to engage in anonymous speech or association.

While acknowledging the misuse of the protocol by North Korean-linked hackers for money laundering, the advocates highlight its positive uses in enhancing privacy on the Ethereum blockchain. They believe that the sanctions are unjust and call for their prohibition under the law.

Continued Legal Action:

This is not the first time the Blockchain Association and the DeFi Education Fund have shown their support for the fight against Tornado Cash sanctions.

They previously filed a similar amicus brief in April 2023, backing a lawsuit filed by six individuals against the treasury department. These collective efforts demonstrate the determination of crypto advocates to challenge what they perceive as unjust regulatory actions.

Treasury Department’s Risk Assessment:

The US Treasury’s risk assessment report, released on April 6, 2023, sheds light on illicit crypto transactions in the DeFi sector.

The report identifies bad actors, including the Democratic People’s Republic of Korea (DPRK), cyber criminals, ransomware attackers, and scammers, who exploit vulnerabilities in DeFi services for money laundering purposes.

It highlights the need to address these illicit activities while also considering the potential impact on legitimate uses of DeFi platforms.