Van Loon plaintiffs challenge Tornado Cash sanctions in Fifth Circuit

The Van Loon plaintiffs are set to present their case to the Fifth Circuit, contesting the U.S. Treasury's decision to include Tornado Cash (CRYPTO:TORN) on its Specially Designated Nationals (SDN) list.

On September 1, 2024, Kannon Shanmugam, attorney for Joseph Van Loon and other plaintiffs, announced on X that he would be arguing the case before the Fifth Circuit.

In response, Coinbase’s Chief Legal Officer, Paul Grewal, expressed support, stating, “We appreciate all the work you’ve put in.”

The lawsuit, initiated in September 2023, challenges the Treasury's authority to sanction Tornado Cash, a crypto mixer accused of facilitating the laundering of over $7 billion in illicit funds.

The platform was added to the SDN list following allegations that criminals, including the North Korean-linked Lazarus Group, used it to obscure their financial transactions.

Digital rights advocates, including the Electronic Frontier Foundation (EFF), have shown support for the plaintiffs.

The EFF submitted an amicus brief arguing that the sanctions infringe upon First Amendment rights, particularly those of software developers.

They contend that sanctioning an open-source project without clear guidelines could stifle innovation and development in the digital space.

The District Court previously dismissed the lawsuit, ruling that the sanctions did not violate First Amendment rights.

The court stated that the restrictions apply solely to transactions involving Tornado Cash’s smart contracts and do not extend to the development or discussion of the open-source code itself, unless used for transactions.

Despite this, the EFF and other digital rights advocates remain concerned about the broader implications of the case.

They emphasize the importance of safeguarding coder rights against potential government overreach and plan to continue monitoring the situation closely.

At press time, the Tornado Cash (TORN) price was $2.14.