Coinbase Chief Legal Officer Paul Grewal Backs Crypto Mixer Tornado Cash Defending Right to Privacy

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Paul Grewal, the top lawyer at Coinbase exchange, has publicly expressed his backing for Tornado Cash, a cryptocurrency mixing service. Tornado Cash is currently embroiled in a prolonged legal dispute with US authorities over accusations of money laundering. In a recent post on platform X, Grewal shared Tornado Cash’s stance regarding the US Treasury Department, subtly suggesting that Coinbase stands behind the mixer.

The plaintiffs of Tornado Cash responded robustly to the Treasury Department’s points in the Fifth Circuit Court of Appeals, where we remain committed to upholding Americans’ privacy rights through this significant legal battle.

Grewal Details Tornado Cash Response

Grewal emphasizes that the Treasury must make clear that its accusation targets an organization made up of individuals with a shared objective. Moreover, the CLO mentioned that the agency has adjusted its argument towards the mixer, allegedly to clarify that the Treasury, its developers, and all TORN token holders are united in their objectives.

Based on information from Tornado Cash, the Treasury Department is attempting to exert control over their mixer service. The Treasury justifies this action under the International Emergency Economic Powers Act (IEEPA). However, the filing from Tornado Cash argues that IEEPA does not apply in this situation because the Treasury has not met the necessary legal prerequisites for its implementation.

The Department of the Treasury is claiming a new and unheard-of authority: preventing U.S. citizens from engaging with permanent, publicly accessible software codes that can neither be erased nor modified in any fashion.

Grewal points out that immutable and open-source software codes don’t fall under the category of “property.” However, this creates a predicament for the Treasury Department since they have the power to regulate only the “property” that foreign nationals possess an interest in. One of CLO’s posts indicates that the Treasury requires approval from Congress to regulate. The Coinbase executive justifies this requirement as essential for controlling the utilization of Tornado Cash and other open-source software codes. Grewal added:

Instead of pushing outdated laws beyond their limits, it would be better to wait for the Fifth Circuit’s thoughtful analysis.

Coinbase is Behind Tornado

In April last year, Coinbase expressed its support for an effort aiming to overturn the ban on Tornado Cash. Yet, Judge Robert Pitman of the US District Court for the Western District of Texas dismissed this case in August, without it proceeding to trial. The judge reasoned that the sanctions did not directly impact the plaintiffs, among whom is Ethereum core developer Preston Van Loon. Additionally, Judge Pitman determined that the US Treasury Department holds the constitutional authority to impose sanctions on Tornado Cash.

The judge rejected the claim that smart contracts aren’t considered property due to being “unchangeable and thus unownable.” Pitman explained that according to the US Department of the Treasury’s Office of Foreign Assets Control, “contracts in all their forms” are classified as property.

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2024-04-16 14:38