Jerry Brito and Peter Van Valkenburgh at cryptocurrency think tank Coin Center may think they’ve made an effective argument over Tornado Cash, which I’ll have WaPo explain first:
The service, Tornado Cash, is what is known as a mixer, and it pools digital assets to obscure their ownership. Since its launch in 2019, the program has laundered more than $7 billion in digital assets, according to the Treasury Department. By adding the service’s website and 45 associated crypto wallets to the sanctions list, the administration makes it illegal for any American to transact with them.
“Despite public assurances otherwise, Tornado Cash has repeatedly failed to impose effective controls designed to stop it from laundering funds for malicious cyber actors on a regular basis and without basic measures to address its risks,” Brian Nelson, Treasury’s undersecretary for terrorism and financial intelligence, said in a statement.
Here’s Brito and Van Valkenburgh:
Moreover, while limitations on speech are often constitutional when applied after the fact (e.g. defamatory speech can be penalized), prior restraints on speech are typically unconstitutional. OFAC sanctions, unlike a defamation claim, operate as a regime of strict liability, meaning that no prosecutor or judge needs to make any public showing of fact to add a name to the sanctioned persons list, and transactions with anyone on that list are banned–a prior restraint–irrespective of the specific details of any particular transaction or the motivations of the transacting person. The Constitutionality of that regime as it is typically applied has not, to our knowledge, been challenged on First Amendment or due process grounds. This particular usage of OFAC raises heightened constitutional concerns because it is, again, not a ban on one non-US person’s ability to use the financial system, it is instead a ban on effectively every American’s ability to use a particular open source software tool.
While I’m no lawyer, their arguments appear to be a mess:
- Tornado Cash is a platform, not an open source software tool. The sanction appears to be against the platform. Whatever tool it’s built on, it’s not banned, at least that I can tell.
- But tools, despite decades of “warranties” that warranty that software has no particular use, are built with particular uses in mind. I’m a software engineer, trust me on this. And, yes, like any tool, people unconnected with the development of a tool often find really cool things to do with it. But a tool that enables anti-social activities to an extent thought to be far greater than its hypothetical enablement of a social good may be a target for banning that I, and many others, would consider valid. Keep in mind one person’s social good may be someone else’s social evil, with thanks to Heinlein.
- Same applies for a platform using said tool(s).
- Especially when the platform’s history demonstrates that its most popular function happens to be illegal, cf. WaPo.
In the end, given the apparent bias of authors Brito and Van Valkenburgh, I’d be a little cautious about taking their arguments at face value. Like I said, I’m no lawyer, but a plain English reading suggests they either don’t understand the difference between a tool and a platform, or they’ve deliberately confused the two.
