A US federal judge has dismissed a lawsuit filed by a group of crypto investors and developers alleging that the Treasury Department violated their constitutional rights by sanctioning Tornado Cash, a decentralized mixing service that allows users to anonymize cryptocurrency transactions.
The plaintiffs, backed by Coinbase, argued that Tornado Cash is not a real asset, but rather a set of smart contracts that anyone can interact with. They also claimed that the sanctions violated their freedom of speech and expression, as well as property rights in smart contracts.
However, US District Court for the Western District of Texas, Judge Robert Pitman ruled that the Treasury Department acted within its jurisdiction and that Tornado Cash was indeed an entity consisting of a decentralized autonomous organization (DAO) that administers the mixing service through its voting members.
The judge also dismissed plaintiffs' claims that Tornado Cash had no ownership rights in smart contracts and that the sanctions violated First Amendment rights to the United States Constitution.
The Treasury Department's Office of Foreign Assets Control (OFAC) sanctioned Tornado Cash in 2022, claiming that the platform was used to hide the source of crypto funds stolen from decentralized exchanges and games like Axie Infinity.
*Not investment advice.
