Coin Center loses Tornado Cash lawsuit, plans to appeal

Last November, the Office of Foreign Assets Control (OFAC) added Tornado Cash to its list of “Specially Designated Nationals or Blocked Persons.” Coin Center subsequently filed a lawsuit against the U.S. Treasury Department and Treasury Secretary Janet Yellen, among others, over OFAC’s sanctions on cryptocurrency mixers, but the lawsuit has now been dismissed. Coin Center maintains in the lawsuit that addresses associated with the non-upgradable smart contracts that make up the core of Tornado Cash are not appropriate targets for sanctions. One argument centers on whether the entity sacrifices any benefit from these contracts because they currently cannot be changed. However, the court found that "TORN holders still have an indirect benefit in using the core software tools and the service as a whole, because this increases the value of TORN." The court similarly rejected the argument that Tornado Cash was protected by the First Amendment, holding that "the designation of Tornado Cash does not prevent plaintiffs... from spending money or making donations for political purposes, nor does it prevent organizations from accepting anonymous donations." Neeraj Agrawal, head of communications at Coin Center, expressed disappointment and explained that the company intends to appeal the decision.