Tornado Cash Civil Decision Limits the Reach of the Treasury Department’s Actions while Skirting a Full First Amendment Analysis

A District Court recently considered a civil claim that the Treasury Department overstepped when it listed Tornado Cash on the U.S. sanctions list. This claim took some steps, if not enough, to address EFF’s concerns about coders rights.  

In the case, Van Loon v Department of the Treasury, EFF argued in an amicus brief that the government needed to do more to ensure that coders’ First Amendment rights were protected when it took the unprecedented step of placing an open-source project on the Specially Designated Nationals (SDN) sanctions list.  That led Github to temporarily take down the project and essentially halt all additional work on it.  While the government later clarified in an FAQ— issued after EFF and others had publicly complained— that it did not intend to prohibit “discussing, teaching about or including open source code in publications,” we argued that this didn’t go far enough to protect coders. We urged the Court to require the Treasury Department to follow the strict limits of the First Amendment and to be more clear and careful in its actions.

The District Court did not agree with us that the government overstepped the First Amendment here, and dismissed the case overall.  But, in interpreting the government’s actions, it did make even more clear that the scope of the sanction did not include coders developing the code. The Court said:   

Similarly, amicus curiae Electronic Frontier Foundation argues that OFAC’s designation has had a chilling effect on certain code developers. However, OFAC’s designation blocks only transactions in property in which Tornado Cash holds

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