Tornado Cash, the crypto mixer, has encountered further setbacks in court as Judge Robert Pitman has rejected a motion from participants who were previously enjoined. These participants sought permission to present an oral argument, claiming that the U.S. Department of Treasury had exceeded its authority in imposing sanctions on the company.
According to a court order dated August 17, the judge also dismissed a request from the Plaintiffs for a partial summary judgment in their favor. Instead, the judge granted this judgment to the U.S. Treasury’s Office of Foreign Asset Control (OFAC).
The Plaintiffs’ argument was based on multiple points, one of which asserted that Tornado Cash is not a formal entity. In response, the judge found this argument unpersuasive, stating that Tornado Cash does indeed qualify as an entity and might fall under such designation according to OFAC regulations.
Furthermore, the judge emphasized that Tornado Cash’s entity designation extended to its decentralized autonomous organization (DAO).
“The DAO is an entity unto itself that, through its voting members, has demonstrated an agreement to a common purpose. As the government notes, the structure is not unlike that of stockholders of a corporation who may not intend to vote in a shareholder meeting without this affecting the structure of the entity,” read the court order.
Represented by six individuals, including two employees from Coinbase, the Plaintiffs faced disappointment following the court’s ruling. In light of this decision, Coinbase’s Chief Legal Officer, Paul Grewal, announced on Twitter that the exchange would support the Plaintiffs’ effort to file an appeal for a review by the Fifth Circuit.
Rights are rarely secured on a path that is always ⬆️ and ➡️. We continue to believe Plaintiffs' challenge to OFAC's Tornado Cash action is right. We’ve always known that Fifth Circuit review is required to resolve these issues, and we continue to support them on appeal. 1/4 pic.twitter.com/Tz8FkFCSf2
— paulgrewal.eth (@iampaulgrewal) August 17, 2023