SKV partner John Kinchen represented the Bank Policy Institute (BPI) in submitting an amicus brief last week in an important case concerning the so-called crypto mixing protocol known as Tornado Cash.
The BPI, a nonpartisan advocacy organization whose members include 40 major financial services institutions, among them JPMorgan Chase, Bank of America, and Goldman Sachs, has urged U.S. District Judge Robert Pitman (W.D. Texas) to grant summary judgment in favor of the U.S. Department of the Treasury in a suit alleging the department overstepped its authority when it sanctioned a so-called crypto mixing protocol known as Tornado Cash.
Since crypto mixers can be used to obfuscate the source and destination of digital currency transactions, the government is concerned that they could be used for money laundering.
In the lawsuit, six Tornado Cash users claim that the Treasury violated the Administrative Procedure Act and First Amendment when it listed the crypto mixing service on the Office of Foreign Asset Control’s Specially Designated Nationals and Blocked Persons after finding Tornado Cash was used for money laundering.
In the amicus brief, the BPI shared its opinion that the plaintiffs have distorted “the legal framework and practices of regulated financial institutions in a bid to suggest that the only secure and accessible means to conduct financial activity are cryptocurrency transactions shielded by mixers like Tornado Cash.”
“The thrust of the argument made by Plaintiffs and their amici supporters is that we must be free to perform financial transactions in an unregulated environment because the regulated financial system does not provide sufficient privacy or inclusion,” the institute said Wednesday. “Both the premise and conclusion are wrong.”
The BPI cited the extensive regulatory framework in place that underpins the privacy rights of financial services consumers and measures in place to prevent discrimination against banking consumers.
For more information, read the Law360 article “Bank Group Backs Treasury Dept. In Crypto Mixer Fight”.
