Coinbase Lawyers Upbeat About Legal Challenges To US Tornado Cash Ban As Lawsuit Enters Critical Stretch

The chief attorney at Coinbase said “strong” legal arguments were presented at a key point in the action to reverse the US ban on Tornado Cash. Paul Grewal, the chief legal officer of top US exchange Coinbase, told his 30,100 Twitter followers that he believes the plaintiffs will be successful in their action against the US Treasury Department to lift the ban on using crypto mixers.

Grewal was responding to the summary decision made in US District Court in Texas on Wednesday. “A few months ago, Coinbase supported a court appeal of the US government’s conviction of Tornado Cash. The plaintiffs filed a summary decision today, requesting that the court be reopened (Tornado Cash) for everyone. Their ideas are straightforward yet effective.”

Coinbase is supporting the case, which was first launched in September 2022 after the United States Department of the Treasury registered crypto mixers on the Specially Designated Nationals and Blocked Persons (SDN) list, making their use illegal. Plaintiffs argue that the designation exceeds the agency’s legal jurisdiction and violates freedom of expression under the First Amendment to the United States Constitution.

Grewal said, “As a starting point, any time we provide privacy to everyone, there is a risk that privacy will be misused by anyone.” However, our Constitution and state laws recognize that we do not deny privacy for all because of the criminal acts of some. The plaintiffs, in this case, are among thousands of law-abiding Americans who want to protect their online privacy but are unable to do so because of government sanctions.”

Grewal describes four main justifications for overturning the Tornado Cash (TC) ban.

“Argument number 1: Since TC is not a foreign ‘citizen’ or ‘person’, the government cannot sanction him.” Since TC is software, this should prove itself. A group of people who have never met but happen to have the same token in their wallet neither.

Argument number two is that the law only allows the government to penalize someone’s property. Property is something that can be owned or controlled. However, no one can change, delete or manipulate the 20 TC software smart contracts. They operate independently of human interference.

Argument number 3: Even if ownerless entities can be considered property, these 20 smart contracts are not held by foreign countries or sanctioned persons, and certainly not by those who happen to have certain crypto tokens in their wallets.

Argument number 4: Sanctions are unconstitutional. They are not narrowly defined, and they prevent thousands of law-abiding Americans from using TC to engage in socially useful speech simply because some criminals use them.