Sanctions against Tornado Cash and its smart contracts remain in place

Despite the support companies such as Coinbasethe american justice refuses from return on the conviction crypto blender Tornado Cash. She excludes sanctions against wallets and smart contracts associates.

A year earlier, the U.S. Treasury Department sanctioned the famous blender Tornado Cash through the Office of Foreign Assets Control. According to the agency, the tool has helped launder over $7 billion in crypto-currencies since its inception.

However, its uses are not confined to crime. This is one of the arguments put forward by the justice market players, including Coinbase. In a motion filed with a federal judge, they argued that the U.S. Treasury had exceeded its authority.

Legitimate sanctions for the federal judge

The proceedings were unsuccessful, however. Judge Robert Pitman denied the motion for summary judgment. In the magistrate’s view, the agency’s decisions were valid and the sanctions against Tornado Cash remain in place.

For the plaintiffs, the Office of Foreign Assets Control is prejudicing law-abiding American users whose activity on the blender is qualified as legal and legitimate, Tornado cash bringing a service of privacy protection.

The judge nonetheless felt that the penalty imposed by the Treasury was justified. According to Chainalysis, nearly two billion dollars worth of crypto stolen by North Korean hackers in 2022 was laundered through Tornado Cash.

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Smart contracts like vending machines

However, for Coinbasethe Treasury is overstepping its authority by sanctioning smart contracts, at the risk of damaging the crypto ecosystem and investments. An argument once again rejected by the judge.

And the magistrate drew a parallel between these programmable contracts and vending machines. As a result, they can constitute property or an interest in property and therefore be subject to regulation.

Vending machines are examples of unilateral contracts. And like vending machines, a programmable contract is a tool that performs a particular, predetermined task. The fact that smart contracts do so without further human intervention, like a vending machine, or that they are immutable, does not affect their status as a type of contract and, therefore, a type of good within the meaning of the regulation,” the judge justified.

Coinbase’s General Counsel, Paul Grewal, reacted to the ruling by announcing that the US exchange would support an appeal.

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