Coinbase Funds a Lawsuit Challenging Sanctioning of Tornado Cash
- According to Coinbase, it has no issue with the Treasury sanctioning bad actors, however, the exchange thinks the regulator could target specific individuals.
- The U.S Treasury Department sanctioned Tornado Cash software on the basis that it was being used by criminals, including North Korean hackers.
- Coinbase shares have gained approximately 3 percent to trade around $70.46.
Coinbase Global Inc. (NASDAQ: COIN) has announced that it is funding a lawsuit by six people challenging the United States Treasury Department’s move to sanction Tornado Cash smart contracts. The Coinbase-funded lawsuit is asking the Court to remove Tornado Cash from the U.S. sanctions list.
According to the cryptocurrency exchange, the move to sanction Tornado Cash limits technology developments in the country. Furthermore, other cryptocurrency mixers including Tornado Cash are up and running in other jurisdictions.
“At Coinbase, we’ve been fighting illicit activity since the very beginning, and while we share Treasury’s commitment to fighting crime, we believe this action harms innocent people and threatens the future of decentralized finance (DeFi) and web3 specifically,” Coinbase noted in a blog post.
Notably, the U.S Treasury Department sanctioned Tornado Cash software on the basis that it was being used by criminals, including North Korean hackers.
Coinbase Fights For Privacy in Cryptocurrency
According to Coinbase, it has no issue with the Treasury sanctioning bad actors, however, the exchange thinks the regulator could target specific individuals. Coinbase argues that sanctioning the entire technology instead of tech is biased and uncalled for.
The exchange further argues that there are legitimate applications for this type of technology. Thereby trapping many innocent users who had invested in the technology.
Notably, the exchange concludes that the Treasury exceeded its authority, given by “Congress, by sanctioning a technology.
“Sanctioning open source software is like permanently shutting down a highway because robbers used it to flee a crime scene,” the company noted.
The cryptocurrency market has thrived based on user privacy and decentralization. Furthermore, the Bitcoin network is moving towards more privacy through the recent Taproot upgrade, which was unanimously approved by miners.
Meanwhile, the security-oriented crypto token Monero has faced headwinds in several jurisdictions in the name of aiding criminals. However, with the increased regulations, cryptocurrency exchanges require every user to fully comply with their KYC. Thereby making it challenging for criminals to liquidate their stolen funds.
Despite being sanctioned by the United States, Tornado Cash is still operating in other jurisdictions. According to several blockchain security firms, New Free DAO has been exploited via a flash loan, resulting in a loss of $1.2 million. Reportedly, the attacker sent 400 BNB to Tornado Cash
Coinbase, as the largest publicly traded exchange in the states, felt obligated to protect smaller crypto players. Meanwhile, COIN shares have gained approximately 3 percent to trade around $70 as of publication time.
However, the company’s stock market has lost approximately 72 percent of its value in the past year, according to data provided by MarketWatch. Consequently, the company has seen its market capitalization fall from $100 billion recorded at its IPO to the current $15.34 billion.