Crypto lobby group sues Janet Yellen, U.S. Treasury over Tornado Cash sanctions

The U.S. Treasury Department faces a second lawsuit over its August decision to sanction Tornado Cash, a crypto-mixing service that obscures sources of coin transactions. 

The lawsuit filed Wednesday claims the Treasury's sanctions overstepped its authority and punishes US cryptocurrency investors. A crypto industry advocacy group, Coin Center, and a group of users who relied on Tornado Cash for normal privacy reasons named Janet Yellen, secretary of the Treasury, among the defendants. 

Al Drago/Bloomberg

In August, the Treasury's Office of Foreign Assets Control accused Tornado of laundering more than $7 billion of cryptocurrencies since its creation in 2019, including some virtual currencies stolen by a North Korea-sponsored hacking group. The agency also sanctioned crypto wallets associated with Tornado Cash, as well as a related code known as smart contracts, a type of computer program that automatically executes transactions.

The following month, Coinbase Global Inc. helped organize and fund a lawsuit against the Treasury over its sanction of Tornado Cash. Brian Armstrong, chief executive officer of the cryptocurrency exchange, has said that sanctioning a technology could lead to unintended consequences for the industry that's largely built on smart contracts. 

Read more: Crypto's Latest Storm Centers on a Tornado

A spokesperson for the Treasury Department didn't immediately respond to a request for comment. The suit was filed in the U.S. District Court for the Northern District of Florida.