A U.S. judge recently classified Tornado Cash as having the legal status of a “person,” an announcement closely following a similar June ruling concerning the decentralized autonomous organization (DAO), Ooki DAO.
U.S. Court Recognizes Tornado Cash as ‘Person’ in a Dispute with OFAC
During a legal battle with the U.S. government and specifically OFAC, the complainants argued that Tornado Cash was merely decentralized software, while the government saw it as an entity involved in cryptocurrency mixing. The core of the disagreement was whether OFAC had the authority to sanction Tornado Cash and whether this would violate the plaintiffs’ freedom of speech.
The court refuted the plaintiffs’ argument, instead recognizing Tornado Cash as an entity suitable for OFAC designation. U.S. Judge Robert Pitman reasoned that Tornado Cash’s collective efforts align with the regulatory definition of an “association.” He stated:
Judge Pitman also noted that Tornado Cash’s interest in its smart contracts met the regulatory definition of “property.” These contracts, which produce revenue for Tornado Cash, were considered tangible benefits.
Regarding First Amendment issues, Pitman clarified that the government’s actions did not infringe on protected speech, only limiting transactions related to Tornado Cash’s property rights, not interactions with its open-source code.
The court also noted that the plaintiffs’ Fifth Amendment claims were largely dismissed due to insufficient follow-up, and the government’s request for summary judgment on all claims was supported. Judge Pitman denied the plaintiffs’ request for summary judgment and affirmed the government’s counter-claim, stating:
The OFAC’s decision concerning Tornado Cash was legally sound, with no violation of the plaintiffs’ constitutional rights.
On June 9, 2023, the CFTC achieved a legal victory when a judge ruled that Ooki DAO qualifies as a “person” under the Commodity Exchange Act. CFTC Division of Enforcement director Ian McGinley warned that the ruling signaled that the law could not be evaded by using a DAO structure.
Frequently Asked Questions (FAQs) about fokus keyword: Tornado Cash
What is the significance of the U.S. court ruling regarding Tornado Cash?
The U.S. court ruled that Tornado Cash holds the legal status of a “person.” This decision recognizes the collaborative efforts of its founders, developers, and DAO governance model. The ruling echoes a similar verdict related to Ooki DAO and could have broader implications for how decentralized systems are legally treated.
Did the court accept the plaintiffs’ argument that Tornado Cash is simply decentralized software?
No, the court dismissed the plaintiffs’ stance that Tornado Cash is only decentralized software. Instead, it recognized Tornado Cash as an entity aligning with the regulatory description of an “association,” suitable for OFAC designation.
What was Judge Robert Pitman’s perspective on Tornado Cash’s smart contracts?
Judge Pitman identified that Tornado Cash holds a vested interest in its smart contracts, aligning with the regulatory classification of “property.” These contracts autonomously generate revenue as fees for Tornado Cash, representing a tangible benefit.
How does this ruling relate to a previous verdict involving Ooki DAO?
The ruling regarding Tornado Cash mirrors a preceding lawsuit involving Ooki DAO. On June 9, 2023, a judge determined that Ooki DAO qualifies as a “person” under the Commodity Exchange Act, marking a consistent legal stance toward DAO structures.
Did the government’s decision on Tornado Cash infringe upon the First Amendment rights?
No, Judge Pitman clarified that the government’s moves did not infringe upon safeguarded speech. The designation only curtailed transactions linked to Tornado Cash’s property rights without restricting engagement with its open-source code or other services.
More about fokus keyword: Tornado Cash
- Tornado Cash Official Website
- OFAC Information
- U.S. Commodity Futures Trading Commission (CFTC)
- Legal Documents Related to the Case
- Previous Ruling on Ooki DAO