Blockchain Association files support in suit to lift Tornado Cash sanctions

November 21, 2023 Coin Telegraph

The crypto advocacy group said OFAC must act within its statutory authority by sanctioning bad actors, not open-source software tools.

The Blockchain Association has thrown fresh support behind six plaintiffs suing the United States Treasury Office of Foreign Assets Control (OFAC) over its sanctions on the crypto mixer Tornado Cash.

In a Nov. 20 amicus curiae brief to a U.S. appellate court, the crypto advocacy group argued OFAC’s decision to sanction the privacy protocol was not only unlawful but exceeded its statutory authority and was both “arbitrary and capricious” — contrary to the U.S. Constitution.

It’s the second amicus brief filed by the Blockchain Association supporting a group of Tornado Cash users appealing a lower court’s ruling that upheld OFAC’s decision to add the cryptocurrency mixer to its list of sanctioned entities.

Today we filed an amicus brief in the 5th Circuit appeal of Van Loon v. Treasury regarding OFAC’s sanctions against Tornado Cash.

Read Senior Counsel @MTCoppel's thread below for more. https://t.co/1pmSAt1Bds https://t.co/c5ScaTDr9N pic.twitter.com/e9ySvcKdeM
— Blockchain Association (@BlockchainAssn) November 20, 2023

Blockchain Association senior counsel Marisa Coppel emphasized in a Nov. 20 statement that OFAC needs to focus on sanctioning bad actors rather than outright banning tools, which she claimed it has no authority over.

“OFAC must see Tornado Cash for what it is: a tool that can be used by anyone,” Coppel said. “Rather than sanctioning a tool with a lawful purpose, OFAC should remain focused on the bad actors that misuse such tools.”

“OFAC’s action sets a dangerous new precedent that drastically exceeds their authority and jeopardizes law-abiding Americans’ right to privacy.”

In its brief, the Blockchain Association suggested OFAC should act within the bounds of the law by seeking approval from Congress to ban crypto mixers such as Tornado Cash.

“The proper remedy is to seek legislation from Congress that would provide supplemental authority in the uniquely decentralized digital asset context — not to improperly stretch its existing authorities,” it said.

“Such a power-grab would be a slippery slope that could threaten all manner of internet-based tools that have heretofore been freely available.”

The Blockchain Association has long held that Tornado Cash has no owner or operator and can function automatically without human intervention or assistance.

5/ OFAC’s authority only extends to persons or property…the Tornado Cash software is neither.

There is no owner.
No operator.
It functions autonomously.
And immutably.
— Marisa Tashman Coppel (@MTCoppel) November 20, 2023

OFAC first sanctioned Tornado Cash in August 2022. It alleged that individuals and groups had used the mixer to launder more than $7 billion in cryptocurrencies since 2019, including the $455 million stolen by the North Korea-affiliated Lazarus Group.

Crypto exchange Coinbase also backed the suit, pledging to

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Two more charged with teaching North Koreans to evade US sanctions with crypto

April 27, 2022 Coin Telegraph

charge

Two EU citizens have been indicted for violating U.S. sanctions on North Korea when they jointly planned a crypto conference there.

Two European citizens have been charged by a United States district court in connection to a blockchain and cryptocurrency conference in North Korea which violated U.S. sanctions back in 2019.

According to the U.S. Department of Justice, the court documents allege that Alejandro Cao De Benos, a citizen of Spain, and Christopher Emms, a citizen of the United Kingdom conspired to violate U.S. sanctions on North Korea when they jointly planned and organized the 2019 Pyongyang Blockchain and Cryptocurrency Conference.

The pair allegedly worked with former Ethereum developer Virgil Griffith to provide instruction on how the DPRK could use blockchain and cryptocurrency technology to launder money and evade sanctions. Later, the three continued to provide additional cryptocurrency and blockchain services to the sanctioned nation by seeking to help them build cryptocurrency infrastructure and equipment.

Griffith is well known in the cryptocurrency space for his extensive work on the Ethereum cryptocurrency platform during its early years. He was arrested by the Federal Bureau of Investigation (FBI) in November 2019 for his connection to the conference, and pleaded guilty in September last year for violating the International Emergency Economic Powers Act (IEEPA)

On April 12, he was sentenced to 63 months in prison and slapped with a $100,000 fine.

The indictment also alleges that Cao De Benos and Emms recruited Griffith to speak at the DPRK conference and arranged his travel to the DPRK in 2019 for this purpose. It also alleges that Cao De Benos coordinated with the DPRK government for Griffith’s participation to the conference.

The pair have been charged with one count of conspiring to violate U.S. sanctions in violation to the IEEPA, which carries a maximum penalty of 20 years prison.

In an accompanying statement published by the U.S. Department of Justice, the FBI issued a stark warning to any persons or companies thinking of circumventing U.S. sanctions against a foreign government.

Acting Assistant Director Bradley S. Benavides of the FBI’s Counterintelligence Division said:

Those contemplating evading U.S. sanctions against a foreign government should know the FBI and its partners will aggressively investigate these cases.

The indictment comes at an interesting time, after the U.S. Treasury’s Office of Foreign Assets Control (OFAC) recently announced it will be targeting entities and individuals involved in attempts to evade sanctions imposed by the United States and its international partners on Russia.

Last week, the U.S. Treasury Department announced it had named a Russia-based crypto mining services provider BitRiver AG and several subsidiaries as firms facilitating the evasion of sanctions.

“The United States is committed to ensuring that no asset, no matter how complex, becomes a mechanism for the Putin regime to offset the impact of sanctions.”

On Friday, OFAC announced it had sanctioned three Ethereum addresses allegedly linked the North Korean linked theft of more than $600 million in crypto from nonfungible token game Axie Infinity’s Ronin sidechain in March.