Tornado Cash Supporters Lose Case After Judge’s Latest Judgment

Key Points:

• A Coinbase-backed group fails to overturn U.S. Treasury sanctions on Tornado Cash’s crypto service.
• A federal judge validates Treasury’s authority, citing Tornado Cash’s entity status and decentralized governance.
• The ruling highlights the ongoing debate over privacy and control in the dynamic cryptocurrency landscape.

According to Bloomberg, a legal battle involving cryptocurrency investors and developers, backed by Coinbase, has reached a conclusion as a federal judge ruled against their claims. The lawsuit aimed to challenge the authority of the U.S. Treasury Department in its imposition of sanctions on Tornado Cash, a crypto transaction anonymization service.

Judge Robert Pitman of the U.S. District Court for the Western District of Texas upheld the authority of the Treasury Department. He stated that Tornado Cash possesses distinct properties, including ownership of smart contracts, thereby establishing itself as a recognized entity.

Around a year ago, the Treasury’s Office of Foreign Assets Control (OFAC) accused Tornado Cash of laundering over $7 billion in cryptocurrencies, alleging its involvement in facilitating illicit activities by groups like North Korea’s Lazarus Group.

Consequently, the agency imposed sanctions on wallets associated with Tornado Cash and its smart contract code.

Coinbase and crypto market participants supported the legal effort to overturn these sanctions, asserting that the actions hindered legitimate transactions. However, the judge ruled that the Treasury Department’s sanctions were well-founded and valid.

The argument that Tornado Cash lacked entity status was rejected, as the judge highlighted the existence of a decentralized autonomous organization (DAO) governing the platform.

The case highlighted the complex interplay between digital currencies, privacy concerns, and legal oversight.

Despite the setback of the crypto community’s challenge against the Treasury Department’s actions, the ongoing dialogue underscores the evolving landscape of cryptocurrency regulations and their broader implications for financial privacy and security.

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