Coinbase Is Paying for the Lawsuit Against U.S. Treasury for Suing Tornado Cash

The ban of crypto mixer Tornado Cash by the U.S. Treasury last month has caused an outrage in the crypto space. As per latest details, Coinbase, the largest crypto exchange in the United States, is paying for the cost of the lawsuit against the U.S. Treasury.

Earlier today, six individuals including two Coinbase employees have filed the lawsuit stating that the U.S. Treasury overstepped its authority of blocking financial transactions. The Treasury department argued that Tornado Cash has been used by foreign terrorists to launder their money. The Treasury’s Office of Foreign Assets Control (OFAC) accused Tornado Cash of laundering over $7 billion in cryptocurrencies since its creation in 2019.

However, in the complaint, filed in federal court in Waco, Texas, lawyers representing Tornado Cash stated: “None of the plaintiffs is a terrorist or a criminal. None supports terrorism or illegal activity. None launders money. Each is an American who simply wants to engage in entirely lawful activity in private.”

Paul Grewal, Coinbase’s chief legal officer, said that OFCA’s move is unprecedented and could cause a great pain to the crypto industry. In his interview with Bloomberg, Grewal said: “Neutral technologies and tools are not within the sanctions law as has been written by Congress. Just because armed robbers used a highway doesn’t mean the highway should be banned. We felt compelled to act.”

Coinbase Chief Executive Officer Brian Armstrong has also been hinting at legal actions against the OFAC in his recent tweets. He has been vocal against the push for censorship by the regulators. In a post accessed by Bloomberg, Coinbase said: “We have no issue with the Treasury sanctioning bad actors, but in this case they went much further and took the unprecedented step of sanctioning an entire technology. Now many innocent users have their funds trapped and lost access to a critical privacy tool.”

Armstrong further noted that the Treasury’s actions “threatens the future of decentralized finance (DeFi) and web3 specifically”. Coinbase’s senior security risk analyst, Tyler Almeida, also used Tornado Cash to send some funds to Ukraine. However, these funds remained locked after the lawsuit.

In its sponsored lawsuit, Coinbase is now looking for a court order that would permanently prevent the Treasury Department from putting Tornado Cash on its sanctioned list.

Besides, Tornado Cash’s customers also claim that violate their First Amendment right to speak freely and donate to “important and potentially controversial political and social matters.”