A motion by six individual including two Coinbase employees that alleged that the US Department of the Treasury exceeded its authority in sanctioning crypto mixer Tornado Cash was denied by a federal judge on Thursday.
The plaintiffs argued that the Treasury’s actions affected innocent US citizens who were using the service for its privacy features. However, Robert Pitman of the US District Court for the Western District of Texas who was hearing the case agreed with the Treasury’s decisions, media reports said.
About a year ago, the Treasury’s Office of Foreign Assets Control (OFAC) accused Tornado Cash of facilitating money laundering to the tune of $7 billion worth of cryptocurrencies since its came into being in 2019. The department also banned crypto wallets and smart contracts connected to Tornado Cash.
In a report early this year, blockchain intelligence firm Chainalysis reported that North Korean hackers who stole a whopping $2 billion worth of crypto in 2022 depended heavily on Tornado Cash to convert and launder the stolen digital assets. Until the US Treasury banned Tornado, it was the most-preferred crypto mixing platform that allowed crypto holders to obscure the trail of funds, sometimes allegedly used by entities.
Coinbase had expressed its support for the motion. Its chief legal officer Paul Grewal has reasserted that the company would support an appeal.