A group of Tornado Cash users has filed an appeal in federal court following a ruling upholding the United States Treasury’s decision to add the cryptocurrency mixer to its list of sanctioned entities.

In a Nov. 13 filing in the U.S. Court of Appeals for the Fifth Circuit, lawyers representing plaintiffs Joseph Van Loon, Tyler Almeida, Alexander Fisher, Preston Van Loon, Kevin Vitale and Nate Welch argued that the U.S. Treasury “stretched [its] authority beyond recognition” in sanctioning Tornado Cash transactions. The filing came in response to an August decision by a Texas federal judge who ruled the crypto mixer could be sanctioned under the regulatory purview of Treasury’s Office of Foreign Assets Control.

“The district court erred by concluding that the Department satisfied three of the requirements for a designation under [International Emergency Economic Powers Act] and the North Korea Act,” said the Nov. 13 filing. “[T]he Department’s action is contrary to law and in excess of statutory authority under the Administrative Procedure Act.”

According to the plaintiffs, smart contracts under Tornado Cash identified in the lawsuit were “immutable and ownerless” and failed to meet the U.S. Treasury’s regulatory definition of “property” subject to sanctions. The appeal also challenged Treasury’s definition of “interest,” claiming Tornado Cash has no “legal, equitable, or beneficial interest” in users’ smart contracts.

The filing was the latest legal move in a lawsuit first filed by the six individuals in September 2022. The U.S. Treasury’s Office of Foreign Assets Control added Tornado Cash to its Specially Designated Nationals list in August 2022, prompting criticism and outrage from many in the space.

Coinbase chief legal officer Paul Grewal said in a Nov. 13 X thread he supported the efforts of the plaintiffs, saying the appellate court would carefully consider the filing. The crypto exchange has been publicly supporting Van Loon and the other plaintiffs since the September 2022 lawsuit.

Crypto advocacy group Coin Center, which filed its own lawsuit against the U.S. Treasury over Tornado Cash in October 2022, similarly lost its case in Florida federal court. The group filed an appeal in the U.S. Court of Appeals for the Eleventh Circuit on Nov. 6.

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U.S. authorities have also pursued criminal charges against individuals involved with Tornado Cash. In August, the Justice Department charged co-founders Roman Storm and Roman Semenov with conspiracy to commit money laundering, conspiracy to commit sanctions violations and conspiracy to operate an unlicensed money-transmitting business.

Storm was released on a $2-million bond following his arrest and pleaded not guilty to all charges in September, while Semenov was not in custody at the time of publication. Authorities in the Netherlands arrested Tornado Cash co-founder Alexey Pertsev for similar charges related to money laundering in August 2022. He was released in April 2023 to await trial.

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