Crypto exchange targets U.S. Treasury sanctions in national security clash | Crypto

Crypto exchange targets U.S. Treasury sanctions in national security clash

Read Time:2 Minute

-Coinbase, the largest U.S.-based cryptocurrency exchange, is bankrolling a lawsuit against the Treasury Department challenging its decision to sanction a program that allowed North Korean hackers and other illicit actors to launder billions of dollars worth of digital tokens.

-The U.S. government has said stolen crypto is a primary source of money for North Koreas nuclear program.

-Crypto interests, however, were outraged by Treasurys targeting of the crypto mixer Tornado Cash, which helps disguise the origin of cryptocurrency. They criticized the decision last month as an unprecedented assault on computer code and a potential violation of the Constitutions free speech protections.

-At least one group, the crypto think tank Coin Center, threatened legal action.

-But Coinbase is the first to follow through, sponsoring a court challenge that six plaintiffs filed Thursday in federal court in Waco, Texas. All of them are individuals who say they formerly used Tornado Cash for legitimate purposes and have been financially damaged by the sanctions; two of them are Coinbase employees.

-Coinbase chief legal officer Paul Grewal said in an interview the company has a unique responsibility to support that cause, given our role in the crypto ecosystem.

-The suit argues that Treasury overstepped its legal authority by sanctioning software, rather than a person or an entity. And it claims the department infringed on the plaintiffs First Amendment rights by barring them from using a tool that enabled them to exercise their free speech.

-The Treasury Department declined to comment.

-Grewal said Coinbase identified the plaintiffs by surveying its own workforce in the wake of the sanctions to find out whether Treasurys move affected them and people they know.

-The Tornado Cash program works by pooling digital assets from different sources before users withdraw them, a function intended to break the traceability of the digital tokens on the public ledger known as the blockchain. Tornado Cash has processed more than $7 billion worth of crypto since its 2019 launch, according to Treasury.

-Tornado Cash defenders say most of that sum was legitimately acquired crypto. But in June and July, 41 percent of funds that went through the program were linked to hacks and other thefts, according to blockchain analytics firm TRM Labs.

-Tornado Cash had become a preferred tool of the Lazarus Group, a hacking gang that carries out digital heists to help fund the North Korean regime and its weapons program, according to investigators. The group used it to process more than $455 million they stole earlier this year in the largest-ever virtual theft.

-Grewal argued Treasury has other means at its disposal to target bad actors using the program to cover their digital tracks. We have a ton of respect for the Treasurys role here and their responsibility, but they

GOQCS6Q6FMI63HHGNASTXUYYMQ Crypto exchange targets U.S. Treasury sanctions in national security clash

Leave a Reply