DC-based policy nonprofit Coin Center sues the US Treasury Department, saying the treasury overstepped its authority by sanctioning Tornado Cash in August 2022
Lawsuit Says Government's Action ‘Was Unlawful’ Aditya Anand / Ethereum World News : U.S Treasury Hit With Second Lawsuit For Tornado Cash Sanctions Reynaldo Marquez / Bitcoinist.com : Coin Center Files Lawsuit Against OFAC Over Tornado Cash Sanctions Tweets: Jerry Brito / @jerrybrito : 1/ Today Coin Center filed suit in federal district court against OFAC challenging its authority to sanction Tornado Cash immutable smart contracts. Jerry Brito / @jerrybrito : 2/ Not only are we fighting for privacy rights, but if this precedent is allowed to stand, OFAC could add entire protocols like Bitcoin or Ethereum to the sanctions list in future, thus immediately banning them without any public process whatsoever. This can't go unchallenged. @hdevalence : Glad to see Coin Center taking the correct, principled stand to defend fundamental values of free expression, the right to privacy, and the freedom from arbitrary criminalization. https://twitter.com/... https://twitter.com/... Neeraj K. Agrawal / @neerajka : We are suing OFAC over the tornado sanction “Privacy is normal, and when we win our lawsuit, using Tornado Cash will be normal again.” https://twitter.com/... Tonya Riley / @tonyajoriley : Co-plaintiffs include an anonymous operator of the 688th Support Brigade, which relied on Tornado Cash to gather funds to purchase equipment for Ukrainian soldiers. https://twitter.com/... https://twitter.com/... @iampaulgrewal : Bravo @jerrybrito and @coincenter https://twitter.com/... Meltem Demirors / @melt_dem : you love to see it thanks to the entire @coincenter team and industry supporters for pursuing this landmark case and attempting to establish an important and much-needed legal precedent 👏 https://twitter.com/...
Context & Ripple Effects
Coin Center’s suit follows a separate challenge brought by six people that included Coinbase employees and crypto developers, turning the sanctions into a broader legal test rather than a single plaintiff dispute. The cases focus on whether OFAC can reach immutable smart contracts through sanctions.
The argument ultimately gained traction: an appeals court later found that immutable Tornado Cash smart contracts were not ownable property, and Treasury subsequently removed Tornado Cash from its blacklist. Coin Center’s filing is an early institutional challenge in that chain of decisions.
First-order effects
- Coin Center puts OFAC’s authority to sanction Tornado Cash’s immutable smart contracts before a federal court, adding a policy-focused plaintiff to the earlier challenge by Coinbase employees and developers.
- OFAC and the Treasury Department must defend the legal basis for treating the protocol’s smart contracts as sanctionable targets.
Second-order effects
- Parallel litigation gives crypto developers and users multiple routes to contest the sanctions, while making the scope of OFAC’s authority a central issue for the sector.
- The dispute sets up the later judicial conclusion that the immutable contracts were not property, a ruling that forced Treasury to remove Tornado Cash from its blacklist.
Third-order effects
- If courts continue to distinguish immutable code from entities or property, sanctions enforcement against decentralized protocols will require more tailored legal theories than protocol-wide designations.
- The case belongs to the crypto sector’s wider legitimacy fight: policy groups, users, and regulators are contesting how existing financial-enforcement powers apply to decentralized software.
The trend: Crypto regulation is moving from broad enforcement actions toward court-tested boundaries over whether decentralized software itself can be regulated or sanctioned.