Last week, the crypto world celebrated a major legal victory when a federal appeals court struck down OFAC’s sanctions on Tornado Cash’s immutable smart contracts in a Coinbase-funded lawsuit. While this decision is a significant win for crypto, its implications go far beyond the industry—it challenges the very limits of U.S. sanctions authority on open-source code.
In this episode, Coinbase’s Chief Legal Officer Paul Grewal and VP of Legal Leah Bressack discuss the case, the reasoning behind the court’s decision, and its broader implications, especially given that other cases are still in court. They address whether they think the government will appeal, how this ruling impacts other privacy tools and the other lawsuits, and why the case is a critical precedent for the intersection of code, law, and innovation.
Plus, what does this mean for Tornado Cash developer Roman Storm?
Show highlights:
Why the decision was so significant, according to PaulWhat reasons the judge used in the rulingThe basics of Tornado Cash and why OFAC sanctioned it in 2022Why Coinbase decided to get involved in the case Why a District Court had previously agreed with OFAC Whether the government will appeal and what the implications of the case are outside of cryptoWhen users could start using the protocolWhether users will be safe to use relayers, which add privacyWhy Paul believes that the 11th Circuit, where the Coin Center Tornado Cash lawsuit was filed, will not ignore this ruling from the 5th CircuitWhether the judges were encouraging Congress to update IEEPA to make it possible for OFAC to sanction smart contractsWhether there’s a risk that under new legislation OFAC could sanction smart contractsHow the case of Tornado Cash developer Roman Storm could be impacted by this decisionPaul’s and Leah’s take on Balaji’s proposal to build privacy-preserving zero knowledge smart contracts on ZEthereumWhether the judges’ opinion will have an impact on existing privacy projectsWhat types of sanctions and regulations the government can impose to prevent money launderingVisit our website for breaking news, analysis, op-eds, articles to learn about crypto, and much more: unchainedcrypto.com
Thank you to our sponsors!
PolkadotRobinhood & ArbitrumPaul Grewal, Coinbase’s chief legal officer
Previous appearances on Unchained:Coinbase’s Top Lawyer Calls SEC Wells Notice a ‘Massive Overreach’ - UnchainedJust a Coincidence? Coinbase and Polygon Lawyers See Bad Omens in SEC CrackdownLeah Bressack, VP of legal at Coinbase
Previous coverage of Unchained on Tornado Cash:Did OFAC Overstep by Sanctioning Tornado Cash?Tornado Cash Sanctioned. Did the Government Overstep Its Bounds?Unchained: Treasury Overstepped With Tornado Cash Sanctions, Rules U.S. Appeals CourtBalaji’s tweet on Zatoshi and ZethereumBankless: Roman Storm Speaks - Tornado Cash Developer on What’s at Stake00:00 Intro01:39 Why this ruling is a major milestone for crypto02:50 The judge’s key reasoning in striking down the sanctions04:00 Why Tornado Cash was sanctioned in 202206:43 How Coinbase became involved in this landmark case13:05 Why the District Court initially sided with OFAC15:55 Whether the government will appeal, and what’s at stake beyond crypto21:22 When Tornado Cash could be used again25:07 Are users safe to use relayers for added privacy?33:53 Why the 11th Circuit might uphold this ruling38:28 Whether Congress is being nudged to rewrite sanctions laws40:52 Could new legislation let OFAC target smart contracts again?44:46 What this means for Tornado Cash developer Roman Storm48:34 Thoughts on Balaji’s idea for ZEthereum50:53 How the ruling could influence other privacy projects54:08 What sanctions might look like in the fight against money laundering
Learn more about your ad choices. Visit megaphone.fm/adchoices