The plaintiffs in the case against the United States Treasury Department’s sanctions on the cryptocurrency mixer Tornado Cash are expressing dissatisfaction with the court’s ruling. A group of five users of Tornado Cash has initiated an appeal against the judgment of the US District Court, which upheld the Treasury Department’s decision to categorize it among sanctioned entities.
In a recent court filing, the plaintiffs—Joseph Van Loon, Tyler Almeida, Alexander Fisher, Preston Van Loon, Kevin Vitale, and Nate Welch—argued to the US Court of Appeals for the Fifth Circuit that the Department exceeded its authority in enforcing the Treasury’s Office of Foreign Assets Control against the cryptocurrency mixer. The basis for their arguments revolves around the enforcement scope of the administration and an alleged misinterpretation of certain terms.
“The district court erred by concluding that the Department satisfied three of the requirements for a designation under IEEPA and the North Korea Act. First, the purported Tornado Cash ‘entity’ as defined by the Department is not a ‘national’ or ‘person,’ because it is neither a natural person nor a group of individuals who have demonstrated an agreement to further a common purpose,” the plaintiffs stated.
Court erred in law, plaintiffs allege
The five plaintiffs, represented legally, argued that the district court misinterpreted the definition of an entity, emphasizing that all holders of the 1.5 million TORN tokens do not act with a common purpose.
The ownership tag was also contested by the appellants, claiming that at least 20 smart contracts in the designation are immutable without owners. They contended that the trial court didn’t determine the statutory meaning of property but instead moved directly to the Treasury Department’s application.
The interests claimed by the defendants were brought to attention, with the court ruling that token holders have a beneficial interest in the smart contracts. The plaintiffs argued that the “entity” Tornado Cash holds no interest in the smart contracts at any level.
Furthermore, the filing urged the court to overturn the ruling, asserting that it would grant the agency increased powers and expand the definitions of entity, property, and interests beyond their intended scope.
Industry executives support “brave” users
Within cryptocurrency circles, the efforts of the five plaintiffs to challenge and seek a reversal of the Department’s ruling have garnered praise. Paul Grewal, Chief Legal Officer at Coinbase, expressed support for the plaintiffs, describing their actions as extraordinary. He emphasized that the appellate process would thoroughly consider all arguments.
Grewal stated, “Congress gave Treasury the power to prohibit transactions involving certain ‘property’ in which a foreign ‘national’ or sanctioned ‘person’ has an interest. Treasury’s action here stretches that authority and those words beyond any recognition.”
Additionally, Coin Center, a cryptocurrency policy think tank, also filed a case against the Treasury Department, which it lost in Florida. Coin Center has since appealed the decision, contributing to the ongoing legal challenges against the Treasury Department’s actions in the cryptocurrency space.
