Stock Market News Today: Dow Closes Almost 200 Points Higher As Fed's Powell Affirms On Fighting Inflation - The Wall Street Journal

Coinbase Global is financing a civil suit that asks a Texas judge to force the Treasury Department to reverse the sanctions against the Tornado Cash platform.

Tornado Cash is a so-called currency mixer, which allows users to co-mingle their funds in order to obfuscate ownership. In August, the Treasury Department imposed sanctions on Tornado Cash, alleging the platform was used to help launder billions of dollars, including $455 million allegedly stolen by North Korean hackers.

The suit argues that these sanctions exceeded the Treasury Department’s statutory authority and infringed upon the plaintiffs’ Constitutional right to privacy.

The six litigants say they have funds frozen in the Tornado Cash protocol because of the sanctions. One of the plaintiffs is a Texas resident, and two are Coinbase employees.

The Treasury Department was not immediately available for comment.

The Tornado Cash sanctions have become a major flashpoint in the developing regulatory framework around cryptocurrencies. The privacy-obsessed crypto industry has largely seen the sanctions as a threat to the nature of open-source software. Many have tried to frame it as a freedom-of-speech issue, arguing computer code is no different from speech..

“We think the Tornado Cash sanctions hurt innocent people,” said Paul Grewal, Coinbase’s chief legal officer. The company, he said, believes the sanctions are not legal, given that they targeted a software program rather than an individual or group.

Companies like Coinbase and Circle Internet Financial Ltd. have complied with the sanctions—Mr. Grewal said the company would continue to do so. Coinbase said it would pay all the costs of the case.

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