On Monday, Paul Grewal, chief legal officer at Coinbase, issued a robust warning against the US Treasury's actions regarding the Ethereum mixer protocol, Tornado Cash. According to Grewal, the Treasury is “bending old laws beyond their breaking point” when trying to apply traditional sanctions to emerging technologies like cryptocurrencies.
Cryptocurrency mixers like Tornado Cash work by obfuscating the parties involved in transactions, which provides an additional layer of privacy for users of public blockchains. However, this technology has come into the crosshairs of regulators, who attribute responsibility to the developers and holders of the TORN governance token if these services are used for illicit transfers of resources.
In 2022, the US Office of Foreign Assets Control (OFAC) imposed sanctions on Tornado Cash, culminating in the indictment of its founders, Roman Storm and Roman Semenov, for alleged money laundering and other offenses related to the unlicensed operation of broadcasts. money.
Bending old laws past their breaking point is not the way. We look forward to the Fifth Circuit's careful consideration. 6/6
— paulgrewal.eth (@iampaulgrewal) April 15, 2024
In response, Tornado Cash and its supporters, including Coinbase, sued the US government, sparking a broader debate about the legality of regulating open source software as if they were traditional physical entities. Grewal argued that software code, because it is open and immutable, does not constitute “property” in traditional terms, thus challenging the legal basis for sanctions.
Brian Armstrong, CEO of Coinbase, also shared his perspectives, comparing the sanctioning of open source software to closing a highway simply because it was used as an escape route by criminals. He argues that this approach not only harms innocent individuals, but also diminishes users' privacy and overall security.
