Crypto Group Sues US Treasury, Yellen Over Code Sanctions

The US Treasury Department faces a second lawsuit over its August decision to sanction Tornado Cash, a crypto-mixing service that obscures sources of coin transactions.

The lawsuit filed Wednesday claims the Treasury’s sanctions overstepped its authority and punishes US cryptocurrency investors. A crypto advocacy group, Coin Center, and a group of users who relied on Tornado Cash for normal privacy reasons named Janet Yellen, secretary of the Treasury, among the defendants.

In August, the Treasury’s Office of Foreign Assets Control accused Tornado of laundering more than $7 billion of cryptocurrencies since its creation in 2019, including some virtual currencies stolen by a North Korea-sponsored hacking group. The agency also sanctioned crypto wallets associated with Tornado Cash, as well as a related code known as smart contracts, a type of computer program that automatically executes transactions.

The following month, Coinbase Global Inc.helped organize and fund a lawsuit against the Treasury over its sanction of Tornado Cash. Brian Armstrong, chief executive officer of the cryptocurrency exchange, has said that sanctioning a technology could lead to unintended consequences for the industry that’s largely built on smart contracts.

Read more: Crypto’s Latest Storm Centers on a Tornado

A spokesperson for the Treasury Department didn’t immediately respond to a request for comment. The suit was filed in the US District Court for the Northern District of Florida.

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Yueqi Yang in New York at yyang492@bloomberg.net

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Sally Bakewell at sbakewell1@bloomberg.net

Cristin Flanagan

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