Tornado Cash users file appeal over judgment in favor of US Treasury

A group of Tornado Cash users has filed an appeal in federal court following a ruling upholding the United States Treasury’s decision to add the cryptocurrency mixer to its list of sanctioned entities.

In a Nov. 13 filing in the U.S. Court of Appeals for the Fifth Circuit, lawyers representing plaintiffs Joseph Van Loon, Tyler Almeida, Alexander Fisher, Preston Van Loon, Kevin Vitale and Nate Welch argued that the U.S. Treasury “stretched [its] authority beyond recognition” in sanctioning Tornado Cash transactions. The filing came in response to an August decision by a Texas federal judge who ruled the crypto mixer could be sanctioned under the regulatory purview of Treasury’s Office of Foreign Assets Control.

“The district court erred by concluding that the Department satisfied three of the requirements for a designation under [International Emergency Economic Powers Act] and the North Korea Act,” said the Nov. 13 filing. “[T]he Department’s action is contrary to law and in excess of statutory authority under the Administrative Procedure Act.”

According to the plaintiffs, smart contracts under Tornado Cash identified in the lawsuit were “immutable and ownerless” and failed to meet the U.S. Treasury’s regulatory definition of “property” subject to sanctions. The appeal also challenged Treasury’s definition of “interest,” claiming Tornado Cash has no “legal, equitable, or beneficial interest” in users’ smart contracts.

The filing was the latest legal move in a lawsuit first filed by the six individuals in September 2022. The U.S. Treasury’s Office of Foreign Assets Control added Tornado Cash to its Specially Designated Nationals list in August 2022, prompting criticism and outrage from many in the space.

Coinbase chief legal officer Paul Grewal said in a Nov. 13 X thread he supported the efforts of the plaintiffs, saying the appellate court would carefully consider the filing. The crypto exchange has been publicly supporting Van Loon and the other plaintiffs since the September 2022 lawsuit.

Ordinary Americans do extraordinary and admirable things. With the support of @coinbase and many others, today the Loon plaintiffs took their case to the 5th Cir. to challenge sanctions against the ownerless, immutable software known as Tornado Cash. https://t.co/jALDHx950v 1/6

— paulgrewal.eth (@iampaulgrewal) November 13, 2023

Crypto advocacy group Coin Center, which filed its own lawsuit against the U.S. Treasury over Tornado…