The US Federal Judge rejected the claims of six plaintiffs that the Government overreached its sanction against Tornado Cash blockchain privacy software.
In August 2018, the US Treasury’s Office of Foreign Assets Control accused Tornado Cash of aiding hackers in laundering $7 billion worth of cryptoassets between 2019 and 2018. The Office imposed sanctions.
However, six people contended in a motion that the government shouldn’t sanction the mixer, asserting it is software — and not a foreign “national,” “person,” Or group.
Coinbase supports the lawsuit to have Tornado Cash removed from OFAC’s records, and also limit Treasury’s overreaching of their powers.
In a ruling released on Thursday, US District Court Judge Robert Pitman said that Tornado cash can be classified as an online game. “person” Under the International Emergency Economic Powers Act
“The entity is composed of its founders, its developers, and its DAO,” “The judge said.”
“The record sufficiently supports OFAC’s determination that the founders, the developers, and the Tornado Cash DAO have acted jointly to promote and govern Tornado Cash and to profit from these activities.”
According to plaintiffs, as smart contracts aren’t owned by anyone, they cannot be deemed property. Moreover, even if deemed property, “Tornado Cash does not have a ‘legal or equitable claim or right in property’ to them,” They argued.
Pitman stated: “The court finds that OFAC’s determination that the smart contracts constitute property, or an interest in property, is not plainly inconsistent with the regulatory definition of those terms.”
The smart contract was also compared to vending machine, as they perform a preset, specific function.
“The fact that smart contracts do so without additional human intervention, like a vending machine, or that they are immutable, does not affect its status as type of contract and, thus, a type of property within the meaning of the regulation,” He also added.
The court has rejected the view of critics who claim that the sanctions are chilling and infringe on the free speech rights for software developers.
In April, one Tornado Cash developer was finally released after 8 months of detention. The man had been awaiting trial on charges of money laundering.
In a summary judgement, the court ruled that the government was right in this case. It is anticipated that the Fifth Circuit Court of Appeals will review the decision.
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