Case 3:22-cv-20375-TKW-ZCB Document 1 Filed 10/12/22 Page 1 of 36
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`UNITED STATES DISTRICT COURT
`NORTHERN DISTRICT OF FLORIDA
`PENSACOLA DIVISION
`
`Case No. __________________
`
`COIN CENTER; PATRICK
`O’SULLIVAN; JOHN DOE; and
`DAVID HOFFMAN,
`Plaintiffs,
`
`v.
`
`JANET YELLEN, in her official
`capacity as Secretary of the Treasury;
`DEPARTMENT OF THE
`TREASURY; ANDREA M. GACKI,
`in her official capacity as Director of
`the Office of Foreign Assets Control;
`and OFFICE OF FOREIGN
`ASSETS CONTROL,
`Defendants.
`
`COMPLAINT
`Plaintiffs file this complaint for declaratory and injunctive relief against
`
`Defendants and allege as follows.
`
`NATURE OF THE ACTION
`On August 8, 2022, the Biden Administration criminalized the use of
`
`1.
`
`Tornado Cash, an open-source software tool that helps Americans maintain their
`
`privacy while using cryptocurrency and related assets. It justified this action based on
`
`its power to sanction foreign enemies, even though Tornado Cash is not controlled by
`
`
`
`UNITED STATES DISTRICT COURT
`NORTHERN DISTRICT OF FLORIDA
`PENSACOLA DIVISION
`
`Case No. __________________
`
`COIN CENTER; PATRICK
`O’SULLIVAN; JOHN DOE; and
`DAVID HOFFMAN,
`Plaintiffs,
`
`v.
`
`JANET YELLEN, in her official
`capacity as Secretary of the Treasury;
`DEPARTMENT OF THE
`TREASURY; ANDREA M. GACKI,
`in her official capacity as Director of
`the Office of Foreign Assets Control;
`and OFFICE OF FOREIGN
`ASSETS CONTROL,
`Defendants.
`
`COMPLAINT
`Plaintiffs file this complaint for declaratory and injunctive relief against
`
`Defendants and allege as follows.
`
`NATURE OF THE ACTION
`On August 8, 2022, the Biden Administration criminalized the use of
`
`1.
`
`Tornado Cash, an open-source software tool that helps Americans maintain their
`
`privacy while using cryptocurrency and related assets. It justified this action based on
`
`its power to sanction foreign enemies, even though Tornado Cash is not controlled by
`
`
`
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`foreign enemies and Americans’ use of the technology does not involve foreign
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`enemies. The Administration’s use of the foreign-affairs power to punish domestic
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`cryptocurrency users was unprecedented and unlawful.
`
`2.
`
`Plaintiffs all use Ethereum. Ethereum is a digital marketplace that uses
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`shared online technology to help people order their finances without needing to trust
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`banks, governments, or other
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`third parties.
`
`It enables transactions involving
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`cryptocurrency and other similar crypto assets. Tens of millions of Americans, from
`
`Tom Brady to local retailers, use Ethereum.
`
`3.
`
`Ethereum’s functionality depends on a transparent public ledger. When
`
`someone completes a transaction using Ethereum, that transaction is posted to a
`
`ledger visible to anyone. The transaction can’t be erased or hidden from view.
`
`Although users transact using pseudonymous addresses, there are a variety of ways to
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`connect a person’s identity—and therefore to all his transactions and assets—to his
`
`address on the public ledger.
`
`4.
`
`If a user doesn’t take proactive steps to protect his privacy, the ledger’s
`
`transparency allows strangers to track his private associations and stalk his intimate
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`relations. It invites publicization of and retaliation for his private contributions to
`
`unpopular causes. And it allows anyone to see whether he has a lot of assets, which
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`would put a target on his back.
`
`5.
`
`To protect themselves, users of Ethereum employ privacy tools. These
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`tools generally allow users to clear any publicly discernible connection between their
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`2
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`past and future transactions. They do this by making transactions by the same person
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`appear unrelated, thereby stymying bad actors who seek to track, stalk, retaliate, and
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`endanger.
`
`6.
`
`Tornado Cash is the state-of-the-art privacy tool on Ethereum. It is a
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`software program permanently stored on the Ethereum ledger, so it can be accessed
`
`or used by anyone. To use Tornado Cash, a user moves his crypto assets to a Tornado
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`Cash address. There are at least 20 such addresses, each for a different type of crypto
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`asset or a different amount thereof. After moving his asset to that address, the user
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`can then direct the asset’s release to a new address, controlled either by him or by
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`someone he wishes to receive the asset.
`
`7.
`
`To anyone viewing the public ledger, it is impossible to tell when the
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`person retrieved his asset or which new address it went to. Once it arrives at the new
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`address, it cannot be connected to the earlier address using publicly available data. If
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`the user wishes to relink the two addresses and prove that both were his, he can do so,
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`selectively revealing his identity, but no stranger can perform this re-identification
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`without his consent.
`
`8.
`
`Nobody
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`controls Tornado Cash.
`
`It
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`is an immutable tool
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`that
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`automatically executes according to the user’s wishes. The tool is software residing on
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`the Ethereum blockchain at specified Ethereum addresses. Anyone with an internet
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`connection can move digital assets to those addresses and the software will
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`automatically perform the aforementioned steps to protect
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`the user’s privacy.
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`3
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`Throughout this entire process no human, apart from the user, is empowered or relied
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`upon to hold or move the assets.
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`9.
`
`Cryptocurrencies like Bitcoin are known, in part, for creating irreversible
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`transactions that, once confirmed in the shared public ledger online, cannot be
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`canceled, withdrawn, altered, or rescinded by the sender or any third party. This
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`quality is often referred to as immutability. Ethereum takes this capability a step
`
`further and allows technologists to publish immutable software tools to the public
`
`ledger. Once published,
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`these tools are available for anyone with an internet
`
`connection to use, and they will perform exactly as the rules in their software
`
`command. No person can alter their functionality or remove their availability, just as
`
`no person can reverse or rescind a cryptocurrency payment.
`
`10.
`
`The International Emergency Economic Powers Act of 1977, which is
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`the statutory descendant of the Trading with the Enemy Act of 1917, allows the
`
`President to restrict trade with foreign enemies under emergency conditions.
`
`11.
`
`As relevant here,
`
`it authorizes the President to “declar[e] a national
`
`emergency with respect to” an “unusual and extraordinary” foreign threat. 50 U.S.C.
`
`§1701(a).
`
`12. Once the President declares that emergency, the Act allows him to
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`criminalize certain transactions, but only if the transactions include “any property in
`
`which any foreign country or a national thereof has any interest.” §1702(a)(1).
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`4
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`13. Under executive delegations and regulations, Defendants exercise a
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`subpart of the President’s power under IEEPA. Specifically, under certain conditions,
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`Defendants can criminalize transactions that fall within the scope of the statute, but
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`only by designating “persons” with whom Americans cannot
`
`trade. 31 C.F.R.
`
`§578.201(a).
`
`14.
`
`Invoking this
`
`authority last August, Defendants criminalized all
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`transactions involving 38 Ethereum addresses. Those 38 addresses include the 20
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`addresses that constitute the core of the Tornado Cash privacy tool—the same ones
`
`described above and that are at issue in this lawsuit.
`
`15.
`
`As a result of the Biden Administration’s action, Americans who use
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`Tornado Cash to protect their privacy while using their own assets are criminals.
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`Additionally, their receipt of any asset through Tornado Cash, even one from a
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`stranger that they did not solicit, is a federal crime. And their use of Tornado Cash to
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`protect their expressive activities is criminal as well.
`
`16. Defendants’ action was unlawful for four main reasons.
`
`17.
`
`First, Defendants’ criminalization of Tornado Cash exceeded their
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`statutory authority because Tornado Cash is used to complete functions that do not
`
`include “any property in which any foreign country or a national thereof has any
`
`interest.” 50 U.S.C. §1702(a)(1). Americans use Tornado Cash unilaterally to protect
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`their own property. Defendants’ defiance of this statutory element assumes an
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`5
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`authority that would give them virtually unlimited control to regulate the American
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`economy.
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`18.
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`Second, Defendants’ criminalization of Tornado Cash also exceeded
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`their regulatory authority because Tornado Cash is not a “person.” 31 C.F.R.
`
`§578.201(a). It is a privacy tool beyond the control of anyone.
`
`19.
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`Third, Defendants’ criminalization of Tornado Cash was arbitrary and
`
`capricious because it failed to consider important aspects of the problem, changed its
`
`position without explanation, and defied its own rules on the books.
`
`20.
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`And fourth, Defendants’ criminalization of Tornado Cash violated the
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`constitutional rights of Tornado Cash users who need it to protect their private
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`associations.
`
`21.
`
`Plaintiffs all would have used or continued to use Tornado Cash to
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`protect their privacy in the future, but are prevented from doing so as a result of the
`
`Biden Administration’s criminalization of Tornado Cash.
`
`22.
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`They respectfully request that this Court hold unlawful, set aside, and
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`permanently enjoin the enforcement of the criminalization of Tornado Cash.
`
`THE PARTIES
`Plaintiff Coin Center is the leading nonprofit research and advocacy
`
`23.
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`center focused on the public-policy issues facing cryptocurrency and decentralized
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`computing technologies. It defends the rights of individuals to build and use free and
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`6
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`open cryptocurrency networks, including the right to write and publish code, the right
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`to assemble into peer-to-peer networks, and the right to do all this privately. Coin
`
`Center produces and publishes research, educates policymakers and the media about
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`cryptocurrencies, advocates for sound public policy, and defends digital civil liberties.
`
`It is based in Washington, D.C.
`
`24.
`
`Coin Center uses Ethereum. It routinely receives contributions from
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`donors in the form of crypto assets.
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`25. Many of Coin Center’s donors want to keep their contributions private.
`
`They value privacy, both when it comes to public knowledge of their crypto assets and
`
`public knowledge of
`
`their expressive associations. Many of
`
`them engage in
`
`transactions that can be traced on Ethereum’s public ledger with the assets that they
`
`intend to contribute to Coin Center.
`
`26.
`
`Coin Center’s donors therefore used in the past, and would use in the
`
`future, Tornado Cash to protect their privacy. They would send a crypto asset to a
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`Tornado Cash address, and then release it to an address controlled by Coin Center. It
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`is impossible to tell whose assets are being sent to Coin Center’s account when they
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`come from a Tornado Cash address.
`
`27.
`
`As a result of the Biden Administration’s criminalization of Tornado
`
`Cash, these donors are less likely to contribute to Coin Center. They are effectively
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`barred from engaging in expressive advocacy because, without Tornado Cash, they
`
`cannot do so with confidence that their associations will remain private. By forcing
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`7
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`them to make contributions on the public ledger,
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`the Biden Administration’s
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`criminalization of Tornado Cash chills their expressive activity. Coin Center expects to
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`lose contributions from these donors.
`
`28.
`
`Coin Center is not a terrorist or a criminal and does not transact with
`
`terrorists or criminals. In the course of receiving contributions through Tornado Cash
`
`from American donors, the donors’ and Coin Center’s assets would never come under
`
`the control of any foreign person.
`
`29.
`
`Plaintiff Patrick O’Sullivan is a software developer who resides in
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`Escambia County, Florida.
`
`30. Mr. O’Sullivan uses Ethereum. He is routinely paid by his employer in
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`crypto assets, and he routinely obtains crypto assets from public exchanges.
`
`31. Mr. O’Sullivan’s use of Ethereum can be monitored on Ethereum’s
`
`public ledger. Mr. O’Sullivan shares his Ethereum addresses with other parties,
`
`transfers assets to himself from accounts with third parties who hold his personal
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`information, and is a publicly known user and developer of Ethereum-related
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`technology. As a result, Mr. O’Sullivan’s transactions and assets can easily be tracked
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`by the public at large.
`
`32. He therefore routinely uses privacy tools to protect himself and his
`
`family. He has used a number of privacy tools, each of which has its own advantages.
`
`33. Mr. O’Sullivan believes that the best practice for protecting his privacy is
`
`to use multiple privacy tools. Mr. O’Sullivan believes that Tornado Cash is one of the
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`8
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`best options for protecting his privacy. And Mr. O’Sullivan does not believe that
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`alternatives, standing alone, would provide him with adequate privacy and security. He
`
`therefore intended to use Tornado Cash in his regular rotation of privacy tools.
`
`34. Mr. O’Sullivan intended to move assets from an address under his
`
`control to a Tornado Cash address and then later release them to a new address, also
`
`under his control. At no point would these assets have been controlled by anyone else.
`
`35.
`
`All of Mr. O’Sullivan’s crypto assets come from his American employer
`
`or from public exchanges. He is not a terrorist or a criminal and does not transact
`
`with terrorists or criminals. In using Tornado Cash, his assets would never come
`
`under the control of any other person, including any foreign person.
`
`36.
`
`As a result of Defendants’ action, Mr. O’Sullivan cannot carry out his
`
`intended uses of Tornado Cash.
`
`37.
`
`John Doe is a human-rights advocate who resides in the southeastern
`
`United States. Mr. Doe is proceeding anonymously because he credibly fears that, if
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`his identity is exposed, Russian agents will learn about his pro-Ukranian activities and
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`will harm him and his family.
`
`38.
`
`After Russia
`
`invaded Ukraine, Mr. Doe began providing and
`
`coordinating support for Ukrainians under attack. Since April 2022, he has been
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`supporting Ukrainians personally and has facilitated sizable crypto donations from
`
`other donors. He and his donors call themselves the 688th Support Brigade.
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`9
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`39. Mr. Doe provides and facilitates donations that go to supporting the
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`most urgent needs of Ukrainians at war. His efforts have paid for gloves, shoes,
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`helmets, drones, and vehicles to assist Ukrainian frontline efforts. While many say they
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`support Ukraine, Mr. Doe and his donors are actually doing something about it.
`
`40.
`
`Crypto donations to Ukraine have made a substantial positive impact. As
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`Senator Toomey recently recounted in a congressional hearing, “While there has been
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`virtually no evidence of Russia meaningfully using cryptocurrencies to evade
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`sanctions, Ukraine has been actively utilizing cryptocurrencies to do tremendous
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`good. Cryptocurrency donations for Ukraine have reached approximately $100
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`million, which has helped Ukrainians defend their country against Russia’s invasion.
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`These funds have gone towards more than 5,500 bulletproof vests, 500 helmets, and
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`410,000 meals,
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`among other
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`things. Ukraine’s Deputy Minister of Digital
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`Transformation has said that ‘each and every helmet and vest bought via crypto
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`donations is currently saving Ukrainian soldiers’ lives.’”
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`41. Mr. Doe and the donors he assists came to the mutual agreement that
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`donating to Ukrainians could jeopardize their and their families’ safety. Without
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`privacy protections, Russian agents and Russian-funded hackers could identify and
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`retaliate against donors for providing frontline aid. If the donors’
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`identities were
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`revealed, their lives could be in danger when they travel abroad and they could be
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`targeted by hackers. Mr. Doe’s donors want to support Ukraine without fear of being
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`harmed. They also inherently value making contributions privately.
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`42.
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`Every single donor has used Tornado Cash. Under Mr. Doe’s direction, a
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`donor will move his crypto asset to a Tornado Cash address, then later release it from
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`that address to an account controlled by Mr. Doe exclusively for the provision of aid.
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`From that latter account, Mr. Doe can send the assets to recipients who purchase the
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`aid for Ukraine. It is impossible for an outside observer to tell whose assets are being
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`sent to the latter account because they all come through a Tornado Cash address.
`
`43. Mr. Doe himself has contributed to these efforts using Tornado Cash.
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`He has moved assets from a personal address to a Tornado Cash address, and then
`
`released those assets from the Tornado Cash address to his address that he uses
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`exclusively for the provision of aid. He intended to continue doing so.
`
`44. Mr. Doe is not a terrorist or a criminal and does not transact with
`
`terrorists or criminals. In the course of using Tornado Cash for his own contributions,
`
`his assets would never come under the control of any other person, including any
`
`foreign person. In the course of using Tornado Cash for contributions by other
`
`American donors, their assets would never come under the control of any foreign
`
`person.
`
`45.
`
`As a result of the Biden Administration’s criminalization of Tornado
`
`Cash, donations have stopped. Mr. Doe is not comfortable facilitating donations
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`without the protection of Tornado Cash. He is not confident that any alternative
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`tools, standing alone, will provide a sufficient level of privacy or security.
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`46.
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`Plaintiff David Hoffman is a crypto asset investor and entrepreneur who
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`resides in New York.
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`47. Mr. Hoffman uses Ethereum publicly. Like many users, Mr. Hoffman
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`makes one of his Ethereum addresses public, so that anyone can access it online and
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`transact with him.
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`48.
`
`After the Biden Administration criminalized Tornado Cash, an unknown
`
`person sent crypto assets to Mr. Hoffman’s public address through Tornado Cash.
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`And Ethereum users like Mr. Hoffman have no ability to reject incoming transfers. So
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`the criminalization of Tornado Cash empowered someone else to implicate Mr.
`
`Hoffman and force reporting obligations on him by causing him to receive an asset
`
`from a sanctioned entity. And it has licensed anyone else who wishes to harass or
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`inconvenience Mr. Hoffman to continue to send crypto assets through Tornado Cash
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`to Mr. Hoffman’s publicly known addresses, each time triggering potential liability and
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`reporting obligations.
`
`49. Mr. Hoffman intended to continue to use Tornado Cash in the future.
`
`He routinely uses privacy tools to protect himself while using crypto assets. Mr.
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`Hoffman believes that Tornado Cash is a uniquely effective tool for protecting his
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`privacy.
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`50. Mr. Hoffman intended to move assets from an address under his control
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`to a Tornado Cash address and then later withdraw them to a new address, also under
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`his control. At no point would these assets have been controlled by anyone else.
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`51. Mr. Hoffman is not a terrorist or a criminal and does not transact with
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`terrorists or criminals. And in using Tornado Cash, his assets would never come under
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`the control of any other person, including any foreign person.
`
`52.
`
`As a result of Defendants’ criminalization, Mr. Hoffman is burdened
`
`with potential civil and criminal liability through no fault of his own, saddled with
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`reporting obligations, and impeded from carrying out his intended use of Tornado
`
`Cash.
`
`53. Defendants—Janet Yellen,
`
`in her official capacity as Secretary of the
`
`Treasury; U.S. Department of the Treasury; Andrea M. Gacki, in her official capacity
`
`as Director of the Office of Foreign Assets Control, and the Office of Foreign Assets
`
`Control—are
`
`responsible
`
`for
`
`the
`
`enforcement
`
`and administration of
`
`the
`
`criminalization of Tornado Cash. Treasury is a federal administrative agency, and
`
`OFAC is an agency within Treasury. Both Treasury and OFAC are headquartered in
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`Washington, D.C. Defendants acted under color of law at all relevant times.
`
`54.
`
`The criminalization of Tornado Cash constituted final agency action.
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`JURISDICTION AND VENUE
`This action arises under the Administrative Procedure Act, 5 U.S.C. §500
`
`55.
`
`et seq., and the United States Constitution.
`
`56.
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`This Court has jurisdiction under 28 U.S.C. §1331.
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`57.
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`Venue is proper in this District under 28 U.S.C. §1391(e)(1) because
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`Plaintiff O’Sullivan resides here and Defendants are federal agencies and officers
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`acting in their official capacities.
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`BACKGROUND
`Ethereum is a digital marketplace. It uses shared online technology to
`
`58.
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`help people transact and order
`
`their
`
`finances. It hosts transactions involving
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`cryptocurrency and other assets that use cryptographic technology.
`
`59.
`
`Ethereum allows people to transact across long distances without
`
`middlemen. It allows people to protect against inflation by using a store of value
`
`whose supply cannot be increased by any central bank. It allows people to structure
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`advanced financial transactions and enforce the terms of their agreements with
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`certainty. And it allows anyone with an internet connection to participate, regardless
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`of their race, religion, or social status.
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`60.
`
`“Ethereum is arguably the most crucial platform in the crypto industry.”
`
`Yaffe-Bellany, Crypto’s Long-Awaited ‘Merge’ Reaches the Finish Line, N.Y. Times (Sept. 15,
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`2022), nyti.ms/3fbOnGm. It is used by tens of millions of Americans. It facilitates
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`transactions involving Ether, the second most common cryptocurrency in America.
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`The present value of Ether is around $200 billion, or about the value of McDonald’s.
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`It also facilitates transactions involving a wide range of additional crypto assets.
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`14
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`61.
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`To use Ethereum, a person creates an address, which is a personal
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`account that only they can access and use. The address uses a pseudonym so that it
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`can’t be immediately traced to the person who uses it.
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`62.
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`Ethereum’s functionality depends on a transparent public ledger. When
`
`someone completes an Ethereum transaction, that transaction is posted to a public
`
`ledger visible to anyone, alongside his address. That transaction can’t be erased or
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`hidden from view.
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`63.
`
`Although a person transacts using a pseudonymous address, there are a
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`variety of ways to connect a person’s identity to his address. In fact, users are
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`sometimes required by law to disclose their identity when using cryptocurrency. Once
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`outsiders connect a person’s identity to the address that he uses, they can inspect all of
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`the user’s transactions and assets.
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`64. Users who don’t use privacy tools can therefore face risks. The
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`transparent nature of the public ledger has allowed violent burglars to identify people
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`holding valuable crypto assets, and even torture them in front of their families until
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`they hand over access to their crypto assets. E.g., Higgins, Man Stole $1.8 Million in
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`Ether After Armed Robbery, Prosecutors Say, CoinDesk (Dec. 13, 2017), bit.ly/3farJhI;
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`Kramer, Dutch Bitcoin Trader Suffers Brutal Torture with a ‘Heavy Drill’ in Violent Robbery,
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`Yahoo! (Feb. 25, 2019), yhoo.it/3SsIK5k. It can also allow unwanted snooping on
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`private relationships and intimate transactions.
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`15
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`65.
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`That’s where Tornado Cash comes in. Tornado Cash is a tool that allows
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`users of cryptocurrency to protect themselves from being followed in everything that
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`they do. It allows them to clear any discernible connection between their past
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`transactions and their future transactions. They route an asset through a Tornado
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`Cash address and then can release it to a new, apparently unconnected address at a
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`later date.
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`66.
`
`To anyone attempting to track the user, they will see that he moved some
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`asset to a Tornado Cash address, but will not know which release from that address
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`was under his control because it will be released to a new address with no connection
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`to the user’s earlier activities. All that an outsider will see on the public ledger is
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`something like the following:
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`Time 1: [1 Ether] Known User Address → Tornado Cash Address
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`Time 2: [1 Ether] Tornado Cash Address → New Address
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`The user also provides, at Time 2, for the release of the asset to an address under his
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`control or someone else’s control. The user also controls how long to wait between
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`Time 1 and Time 2. In between those two times, other users will also move and
`
`release funds from Tornado Cash, so any given user’s two transactions will appear
`
`unrelated.
`
`67.
`
`There are at least 20 addresses that make up the core of Tornado Cash.
`
`Each address corresponds to a certain fixed amount of a certain crypto asset, so each
`
`user using any given Tornado Cash address will move the same amount, such as 1
`
`16
`
`
`
`Case 3:22-cv-20375-TKW-ZCB Document 1 Filed 10/12/22 Page 17 of 36
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`unit, and then release the same amount later on. This makes each interaction with any
`
`given address look indistinguishable.
`
`68.
`
`Throughout the duration of his use of Tornado Cash, the original user
`
`retains complete control of his assets. When he moves assets to a Tornado Cash
`
`address, he retains the ability to release them at any time. Tornado Cash is not like a
`
`bank that lends and invests assets once it receives them; nor does it ever mix or
`
`commingle different people’s assets together. So from the user’s perspective, it’s like a
`
`safe that keeps his asset secure and that only he can unlock.
`
`69. Nobody controls Tornado Cash. It consists of computer code that
`
`self-executes on the user’s command. Nobody can rewrite the Tornado Cash software
`
`to change how it works. And nobody can remove the Tornado Cash software. It is
`
`permanent, immutable, and automatic.
`
`70.
`
`Thanks to Tornado Cash, people can use Ethereum without worrying
`
`about the safety of themselves and their families. They can keep their personal
`
`contributions and associations private. And they can rest assured that their activities
`
`will not be tracked by bad actors who might do them harm.
`
`71. Many Ethereum users use Tornado Cash routinely to keep their assets
`
`private and secure. It is widely regarded as a good practice for anyone who wishes to
`
`participate in Ethereum responsibly.
`
`72.
`
`Like every good technology in human history, Tornado Cash is used by
`
`some people to do bad things. Tornado Cash makes it harder to follow what all users
`
`17
`
`
`
`Case 3:22-cv-20375-TKW-ZCB Document 1 Filed 10/12/22 Page 18 of 36
`
`are doing, so it makes it harder to follow what criminals are doing. But like other good
`
`technologies, it provides innumerable benefits to law-abiding Americans, and their use
`
`is understandable and appropriate.
`
`73.
`
`For some time, it was widely believed that the United States would lead
`
`the way in embracing Ethereum and other crypto assets. Many American governors,
`
`legislators, mayors, and public figures have celebrated America’s pioneering role in the
`
`use of cryptocurrency. See, e.g., Gov. DeSantis Seeks ‘Crypto Friendly’ Florida, CBS Miami
`
`(Dec. 10, 2021), cbsloc.al/3riBn52; Stewart, Cryptocurrency Gets Warm Texas Welcome
`
`from Gov. Abbott, Houston Chronicle (Jun. 22, 2021), bit.ly/3O0vtzk; Yaffe-Bellany, The
`
`Rise of the Crypto Mayors, N.Y. Times (Jan. 25, 2022), nyti.ms/3O4MUyB.
`
`74.
`
`But America’s leading role has been thrown into reverse by the Biden
`
`Administration’s recent efforts to punish crypto users. For a variety of political
`
`reasons, the Administration has sought to hyper-regulate and criminalize common
`
`uses of cryptocurrency. Klein, How Biden’s Executive Order on Cryptocurrency May Impact
`
`the Fate of Digital Currency and Assets, Brookings (Mar. 17, 2022), brook.gs/3vaMxKl;
`
`Hall, Biden Administration Targets Bitcoin Mining In New Report, Nasdaq (Sept. 21, 2022),
`
`bit.ly/3S31DvE. Warmbrodt, Elizabeth Warren’s Anti-crypto Crusade Splits the Left,
`
`Politico (Mar. 15, 2022), politi.co/3xlCPaF.
`
`75.
`
`Perhaps no attack on the crypto world has been as severe as the August
`
`8, 2022 criminalization of Tornado Cash.
`
`18
`
`
`
`Case 3:22-cv-20375-TKW-ZCB Document 1 Filed 10/12/22 Page 19 of 36
`
`76. Under
`
`the International Emergency Economic Powers Act,
`
`the
`
`President can take certain actions after “declar[ing] a national emergency with respect
`
`to” an “unusual and extraordinary threat, which has its source in whole or substantial
`
`part outside the United States, to the national security, foreign policy, or economy of
`
`the United States.” 50 U.S.C. §1701(a).
`
`77.
`
`After declaring an emergency, the President can take certain actions.
`
`§1702(a)(1). As relevant here, the President can prohibit transactions subject to
`
`American jurisdiction, but only if those transactions include “any property in which
`
`any foreign country or a national thereof has any interest.” Id. The President cannot
`
`prohibit transactions that include no foreign property, such as transactions among
`
`Americans or activities by a single American with respect to his own property.
`
`78.
`
`In full, and broken down by element, the statute authorizes the President
`
`to:
`
`investigate, block during the pendency of an investigation, regulate, direct and
`compel, nullify, void, prevent or prohibit
`
`any acquisition, holding, withholding, use, transfer, withdrawal, transportation,
`importation or exportation of, or dealing in, or exercising any right, power, or
`privilege with respect to, or transactions involving,
`
`any property in which any foreign country or a national thereof has any
`interest
`
`by any person, or with respect to any property, subject to the jurisdiction of the
`United States.
`
`§1702(a)(1)(B) (emphasis added).
`
`19
`
`
`
`Case 3:22-cv-20375-TKW-ZCB Document 1 Filed 10/12/22 Page 20 of 36
`
`79.
`
`In 2015, President Obama declared a national emergency with regard to
`
`“cyber-enabled” activities originating from abroad. See Exec. Order 13694, 80 Fed.
`
`Reg. 18,077 (Apr. 2, 2015).
`
`80.
`
`President Obama also delegated some of his power under §1702(a)(1) to
`
`the Secretary of the Treasury. Id. at 18,077-18,078. In his Executive Order, President
`
`Obama authorized the Secretary of the Treasury to identify “person[s]” involved in
`
`qualifying cyber-enabled activities. Id. He then authorized the Secretary to “bloc[k]”
`
`the “property and interests in property” of any of those identified persons.Id.
`
`81.
`
`The Secretary of Treasury in turn delegated that authority to the
`
`Director of OFAC and enacted regulations to govern the exercise of that authority. See
`
`31 C.F.R. §§578.802, 578.201 et seq.
`
`82.
`
`As
`
`relevant here,
`
`those regulations provide that, under certain
`
`conditions, Defendants can criminalize transactions that fall within the scope of the
`
`statute. But they can do so only by designating “persons” with whom Americans
`
`cannot trade. This was the law when Tornado Cash was criminalized (see 80 Fed. Reg.
`
`81,752, 81,754 (Dec. 31, 2015)) and was confirmed as the law in updated regulations
`
`issued subsequent to that criminalization. 31 C.F.R. §578.201(a) (effective Sept. 6,
`
`2022). The term “person” means only an “individual or entity.” §578.313. It does not
`
`cover an idea, a tool, or a technology.
`
`20
`
`
`
`Case 3:22-cv-20375-TKW-ZCB Document 1 Filed 10/12/22 Page 21 of 36
`
`83.
`
`The Director of OFAC maintains a Specially Designated Nationals and
`
`Blocked Persons List, which in turn designates persons pursuant to IEEPA (and other
`
`statutes).
`
`84.
`
`Adding a person to the List criminalizes transactions with that person. If
`
`an American transacts with a person on the List, he commits a federal felony
`
`punishable by up to 20 years in prison and a $1,000,000 fine. Americans are also
`
`required to block any property or interests in property of that designated person, and
`
`are required to report any such blocked property in their possession or control to
`
`OFAC. See 31 C.F.R. §578.201; id. §578.701; id. §501.101 et seq.; 87 Fed. Reg. 54,373
`
`(Sept. 6, 2022).
`
`85.
`
`Some earlier designations on the List include Vladimir Putin, Saddam
`
`Hussein, Bashar al Assad, Qasem Soleimani, and Muammar Gaddafi. See OFAC
`
`Specially Designated Nationals and Blocked Persons List, bit.ly/3QNEZGe.
`
`86.
`
`As a result of these designations, it would be a felony for an American
`
`to, for example, sell a house to Vladimir Putin.
`
`87.
`
`But on August 8, 2022, OFAC made a new and unprecedented kind of
`
`designation. It added “Tornado Cash” to the List. See U.S. Treasury Sanctions Notorious
`
`Virtual Currency Mixer Tornado Cash, OFAC (Aug. 8, 2022), bit.ly/3eP6T7r. Its
`
`designation included 38 Ethereum addresses.
`
`88.
`
`In its press release, OFAC did not appear to understand what it was
`
`designating. It referred to Tornado Cash as a “blocked perso[n],” id., and described its
`
`21
`
`
`
`Case 3:22-cv-20375-TKW-ZCB Document 1 Filed 10/12/22 Page 22 of 36
`
`“willingness to remove” Tornado Cash if it demonstrated “a positive change in
`
`behavior,” id., even though Tornado Cash is merely a widely
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