The crypto advocacy group stated that OFAC should punish lawbreakers rather than open-source software tools in accordance with its statutory jurisdiction.
In their lawsuit against the U.S. Treasury's Office of Foreign Assets Control (OFAC) for imposing sanctions on cryptocurrency mixer Tornado Cash, six plaintiffs have received additional backing from the Blockchain Association.
In an amicus curiae brief submitted to a U.S. appellate court on November 20, the crypto advocacy group contended that OFAC's sanction of the privacy protocol was illegal, beyond its statutory authority, and constituted "arbitrary and capricious" behavior that went against the U.S. Constitution.
This is the Blockchain Association's second amicus brief in support of a group of Tornado Cash users challenging a lower court decision upholding OFAC's decision to include the cryptocurrency mixer on its list of sanctioned entities.
Senior representation for the Blockchain Association Marisa Coppel stressed in a statement on November 20 that OFAC should concentrate on penalizing bad actors rather than outright prohibiting tools, over which she asserted that OFAC has no jurisdiction.
"OFAC needs to recognize Tornado Cash for what it is—a tool that anybody can use," Coppel stated. "OFAC should continue to concentrate on the bad actors who abuse these tools, instead of sanctioning a tool with a legitimate purpose."
"OFAC's action compromises law-abiding Americans' right to security and sets an unsafe new precedent that significantly exceeds their authority."
The Blockchain Association recommended in its brief that Congress be consulted before OFAC can legally prohibit cryptocurrency mixers like Tornado Cash.
"Instead of improperly stretching its existing authorities, the proper remedy is to seek legislation from Congress that would provide supplemental authority in the uniquely decentralized digital asset context," the statement stated.
"Such a power grab presents an unsafe path that could threaten a wide range of before available for free internet-based tools."
For a considerable amount of time, the Blockchain Association has maintained that Tornado Cash is autonomous and doesn't require any human involvement or support.
In August 2022, Tornado Cash received its first OFAC sanction. It alleged that since 2019, people and organizations have used the mixer to launder over $7 billion in cryptocurrency, including the $455 million that the Lazarus Group, which is connected to North Korea, stole.
The Blockchain Association's brief is a welcome development for the cryptocurrency industry. The organization is standing up for the rights of cryptocurrency users and challenging the government's efforts to stifle innovation. The outcome of this case will have far-reaching implications for the future of cryptocurrency regulation.