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Van Loon plaintiffs challenge US Treasury sanctions against Tornado Cash

Van Loon plaintiffs appealed in the Fifth Circuit on September 2 challenging the U.S. Treasury Department's decision to place Tornado Cash on the Specially Designated Nationals (SDN) list. The plaintiffs argued that the Treasury Department's imposition of sanctions on the open-source project without clear guidelines could threaten programmers' First Amendment rights. Van Loon and his team sued the Treasury in September 2023, accusing it of overstepping its authority. Tornado Cash was sanctioned for its alleged involvement in money laundering, with the government claiming that the platform involved more than $7 billion in illicit funds since 2019. The Electronic Frontier Foundation (EFF) supported the lawsuit, fearing that the government's sanctions would have a chilling effect on open-source software development. Previously, the district court had rejected the lawsuit, holding that the sanctions were limited to transactions involving Tornado Cash smart contracts and did not affect the development and discussion of open-source code. However, the EFF and other digital rights advocates remain concerned about the broad implications of the case, emphasizing the importance of protecting programmers' rights.