WASHINGTON—Coinbase, an online platform for the purchase sale and transfer of digital currency, is footing the bill for a lawsuit filed against the Treasury Department by users of the recently sanctioned crypto service, Tornado Cash, according to a new report.
The six plaintiffs include Coinbase employees and other users of the mixing service that was blacklisted by the Treasury’s Office of Foreign Assets Control (OFAC) in August, CNBC reported.
According to CNBC, “Mixing services like Tornado Cash are used to obfuscate crypto transactions, which while anonymous, are easily traceable. The Treasury Department argued this particular service was used to launder more than $7 billion worth of digital currency in the past three years by North Korean hackers and other bad actors.”
But in some cases, mixing services are used for legitimate privacy reasons, the report added. One plaintiff, a senior security risk analyst at Coinbase, used the service to anonymize donations to Ukraine out of fear his address would be targeted by Russian hacking groups. Another had concerns about his family’s security, CNBC added.
“Each is an American who simply wants to engage in entirely lawful activity in private,” according to the lawsuit.
‘Unique Move’
“The sanctions were a unique move by Treasury to blacklist open source software, versus an entity or person,” the report said. “Crypto enthusiasts have argued that the move was an overstep, sets a new legal precedent and could cause negative ripple effects for the tech industry.”
Added Paul Grewal, chief legal officer for Coinbase, “We saw this as a much larger problem. It sets a dangerous precedent -- if this code can be designated without any limits imposed by law, any technology any tool or system could be fair game.”
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