Coin Center is appealing an earlier ruling by the United States district court for Northern Florida, which held that Tornado Cash creates indirect benefits for foreign individuals and entities that can be defined as a financial interest subject to sanctions from the Office of Foreign Assets Control (OFAC).
Legal counsel for Coin Center Jeffrey S. Hetzel told the 11th Circuit Court of Appeals, “The easiest way to resolve this case is to hold that in our plaintiffs’ transactions, there is no foreign property. The district court had to erase the word property from the statute.” Hetzel continued the argument:
“The government, on appeal, says that the software published at the banned addresses is property, but the software is non-proprietary lines of code that no one on the planet can own, control, or alter in any way.”
Attorneys for the United States government countered Hetzel by maintaining that price appreciation of the Tornado Cash token, TORN, directly benefitted TORN holders and asserted that withdrawal fees were a form of accrued benefits for the protocol’s founders.
The notice of appeal filed by attorneys for Coin Center in 2023. Source: Court Listener
Related: US lawmakers demand Treasury explain what it’s doing about Tornado Cash
2022 Coin Center lawsuit filed for US Tornado Cash users
In August 2022, the United States Treasury Department sanctioned over 40 wallet addresses allegedly connected to the Tornado Cash mixing service.
At the time, the Treasury Department claimed these individuals and entities were responsible for approximately $7 billion in money laundering schemes and other illicit transactions.
The US Treasury’s actions prompted Coin Center to file a lawsuit in 2022 on behalf of US residents using the service to protect their privacy.
Coin Center’s attorneys argued that OFAC and the US Treasury “exceeded their statutory authority” by sanctioning the mixing service, which the attorneys stressed was used for lawful purposes by their clients.
Shortly after sanctioning Tornado Cash, the US Treasury clarified that publishing or replicating the Tornado Cash code online does not violate sanctions.
The Treasury also encouraged individuals who used the service before it was sanctioned to apply for an OFAC license and acknowledged that it would approve non-illicit transactions.
Magazine: Terrorism and Israel-Gaza war weaponized to destroy crypto