Coin Center Sues OFAC over Sanctioning of Virtual Currency Mixing Protocol

Coin Center, a cryptocurrency-focused non profit, sued the U.S. Department of the Treasury and OFAC over the decision to designate the virtual currency mixer Tornado Cash on the Specially Designated Nationals and Blocked Persons List (see related coverage).

In a Complaint filed in the Northern District of Florida, Coin Center argued that OFAC's sanctioning of Tornado Cash was "unprecedented and unlawful" and that it (i) exceeds OFAC's statutory and regulatory authority, (ii) is arbitrary and capricious and (iii) violates the constitutional right to privacy.

Coin Center argued that restricting U.S.-based users from utilizing Tornado Cash is unfair given that many of the transactions processed by the mixer do not involve "any property in which any foreign country or a national thereof has any interest." Additionally, Coin Center contended that OFAC did not consider the alternative, non-illicit uses of Tornado Cash, such as to help investors protect their privacy when conducting crypto transactions. Therefore, Coin Center argued that OFAC's decision to criminalize Tornado Cash was arbitrary and capricious.

Coin Center also asserted that OFAC only has the authority to designate persons with whom Americans cannot transact, and this authority does not include the ability to sanction "an idea, a tool or a technology." Coin Center claimed that the blockchain addresses that collectively comprise the Tornado Cash protocol do not constitute a "person" and thus cannot lawfully be sanctioned by OFAC.

Coin Center is seeking injunctive and monetary relief.