Regulation is a touchy topic in the world of cryptocurrency, and it has once again reared its head following a recent lawsuit spearheaded by users and developers within the crypto community. The suit, which was financially backed by the influential crypto exchange, Coinbase, sought to challenge the U.S. Treasury Department, asserting that it overstepped its authority when sanctioning Tornado Cash, a platform geared towards making crypto transactions anonymous.
The subject of the suit was Tornado Cash, which according to Judge Robert Pitman from the U.S. District Court for the Western District of Texas, is a legitimate entity with property interests in its smart contracts. His verdict found the contention that Tornado Cash isn’t a bona fide entity, hard to accept. Furthermore, he stated that the Treasury Department acted within its powers when sanctioning a digital entity, including the decentralized autonomous organization (DAO) governing Tornado Cash. Much like the shareholders of a corporation, a DAO, through its voting members, signifies an agreement to a common objective.
The Treasury Department’s Office of Foreign Asset Control (OFAC) imposed sanctions on Tornado Cash in the previous year, citing that malevolent elements such as the Lazarus Group from North Korea used it to launder crypto funds swindled from decentralized exchanges and online games, notably Axie Infinity.
Judge Pitman also railed against other plaintiffs’ arguments, among them the assertion that Tornado Cash lacks property rights in the physical smart contracts being sanctioned, and that the sanctions violate the First Amendment.
However, these regulatory actions have sparked uproar in the crypto industry, prompting Coin Center to file its individual lawsuit about a month after the lawsuit backed by Coinbase. In the face of these regulatory sanctions, Paul Grewal, the Chief Legal Officer of Coinbase, using the social media platform, X, formerly Twitter, vowed that the company would support an appeal.
So, as we watch the world of cryptocurrency grapple with regulation, the crypto community has taken a strong stance against what it perceives as overreaching regulatory action. It’s a clear hint of the growing tension between crypto advocates and regulatory bodies as they strive to strike a balance between fostering innovation and curbing potential abuses. As these regulatory landscapes continue to shift, it will be intriguing to see how the crypto world responds and evolves.
Source: Coindesk
