Six Americans filed a lawsuit in a Texas federal court alleging the US Treasury Department and Treasury Secretary Janet Yellen illegally sanctioned crypto mixing service Tornado Cash in August. The plaintiffs are not seeking damages, but they do want the government to remove the sanctions.
Is It Legal to Sanction Tornado Cash?
Investors use crypto mixing services like Tornado Cash to perform private transactions, but according to the US government, Tornado Cash is used to launder stolen crypto and hide transactions between sanctioned bodies. What's odd is that Tornado Cash is just software code with a front end attached to it, so it's unclear what is being sanctioned or if it's even legal for the US to sanction open source code.
Adding to the complexity of the situation, a protester sent ETH mixed by Tornado Cash to thousands of well known individuals’ wallets. Their wallets are now sanctioned.
Brian Armstrong to the Rescue?
The plaintiffs in the case include a prominent Ethereum millionaire who claims the sanctions cost him his ETH node, which he built using mixed Ethereum for privacy. Two other plaintiffs are Coinbase employees, and one claims he used Tornado Cash to donate money safely to Ukraine. According to his logic, the US's sanctions on Tornado Cash are restricting his free speech. Coinbase CEO Brian Armstrong is funding the lawsuit for all six plaintiffs, and Armstrong's previous criticism of the sanctions make it clear he's not a fan of the sanctions.
In my opinion, nothing will come of this. The US simply doesn't care about privacy–especially when it comes to people's money.