The crypto-focused research and civil-liberties organization Coin Center plans to appeal in court the OFAC sanctions against the Tornado Cash mixer.
Analysis: What is and what is not a sanctionable entity in the Tornado Cash case.
By treating autonomous code as a “person” OFAC exceeds its statutory authority.https://t.co/kDjoumAhF1
— Coin Center (@coincenter) August 15, 2022
After analysing the department’s decision, the organisation concluded that OFAC had exceeded its statutory powers.
The sanctions targeted the mixer service’s smart contract and the wallets linked to it. However, these entities cannot challenge the restrictions, wrote Coin Center’s Executive Director Jerry Brito and Head of Research Peter Van Valkenburgh in a blog post.
«By treating autonomous code as a ‘person’, OFAC exceeds its statutory powers», they said.
Experts stressed that it is necessary to distinguish between ‘enterprise’ and ‘application’ concepts in the Tornado Cash case.
In May the Treasury added to the sanctions list (SDN) the Bitcoin mixer Blender.io and the wallets associated with it. Both the company and the addresses were controlled by certain individuals, Coin Center experts noted.
The Tornado Cash team built the mixing service but does not run it — the open-source application can be installed and run by any user.
Experts quoted OFAC’s provisions:
«The ultimate aim of sanctions is not to punish, but to achieve positive changes in behaviour. Every year OFAC removes hundreds of individuals and entities from the SDN list. Each delisting is based on careful checks».
According to them, it is unclear how a smart contract can alter its behaviour or challenge its inclusion on the SDN list.
«These actions send a signal (and seem to have been intended for that purpose) that a certain class of tools and software should not be used by Americans even for legitimate purposes», the blog says.
Brito and Van Valkenburgh also noted that, as a result of the sanctions, funds belonging to innocent citizens have been blocked, depriving them of a lawful means to withdraw them.
The organisation will focus on providing legal assistance to affected individuals, informing the public and lawmakers about the situation.
Coin Center will also study with lawyers the possibility of appealing OFAC’s actions in court.
In Tornado DAO, the decentralized autonomous organisation, the community was urged to hire lawyers to fight the sanctions.
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