On Sept. 8, Coinbase announced it was bankrolling a lawsuit against the United States Treasury Department. The cryptocurrency exchange is funding a lawsuit brought by six people that challenges the sanctions on Tornado Cash. The sequence of events proves that governments are purely reactive rather than proactive when it comes to decentralized finance (DeFi).
Tornado Cash was sanctioned by the Office of Foreign Assets Control (OFAC) back in August. OFAC claimed the smart contract mixer has helped to launder more than $7 billion worth of cryptocurrency since its creation in 2019, including over $455 million stolen by the North Korean-linked hackers Lazarus Group. Coinbase CEO Brian Armstrong said in a statement that Treasury went too far, taking “the unprecedented step of sanctioning an entire technology instead of specific individuals.”.