Tornado Cash Won a Key Court Decision That Has Crypto Bros, Software Developers, Hackers, and Money Launderers Cheering All the Way from Texas to Pyongyang

The ruling led to a massive surge in the fiat price of the TORN token, which enjoyed a ~9x surge to nearly $35 in the immediate aftermath of the ruling.

Coinbase (NASDAQ:COIN), Kraken, and Binance Pay slapped with class-action lawsuit over Tornado Cash integration

Coinbase, Kraken, and Binance Pay are facing a class-action lawsuit over their integration of the sanctioned Ethereum mixer Tornado Cash.

On December 13, a proposed class-action lawsuit was filed in the U.S. District Court for the Northern District of California against Coinbase, Kraken, and Binance Pay. The lawsuit alleges that the three cryptocurrency payment service providers violated the law by continuing to integrate Tornado Cash despite the U.S. government’s sanctions.

The complaint alleges that Coinbase, Kraken, and Binance Pay “knowingly and intentionally aided and abetted Tornado Cash users in laundering billions of dollars’ worth of illicit proceeds from fraud, ransomware, narcotics trafficking, and other predicate offenses.”

The lawsuit comes after the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) sanctioned Tornado Cash in August 2022, alleging that the mixer had been used to launder billions of dollars in illicit proceeds, including those stolen by the North Korea-linked Lazarus Group.

Following the sanctions, several cryptocurrency exchanges, including Binance, Coinbase, and Kraken, quickly moved to delist or disable TORN, the native token of Tornado Cash. However, the decentralized nature of the mixer made it difficult to fully block users from interacting with the protocol.

According to the complaint, the three payment service providers continued to integrate Tornado Cash after the sanctions were imposed, allowing users to interact with the mixer and to send and receive mixed ETH tokens.

The complaint alleges that Coinbase, Kraken, and Binance Pay “failed to take any meaningful steps to prevent Tornado Cash users from sending and receiving mixed ETH tokens through their platforms.”

The plaintiffs in the lawsuit are seeking damages, restitution, disgorgement of profits, and a permanent injunction barring the three payment service providers from continuing to integrate Tornado Cash.

The complaint also alleges that Coinbase, Kraken, and Binance Pay “failed to maintain an effective anti-money laundering (AML) program,” despite being required to do so under federal law.

The plaintiffs allege that the three payment service providers “knowingly turned a blind eye to the illicit activity on their platforms in order to maximize their profits.”

The complaint further alleges that Coinbase, Kraken, and Binance Pay “failed to file Suspicious Activity Reports (SARs) with the Financial Crimes Enforcement Network (FinCEN)” for transactions involving Tornado Cash.

The plaintiffs allege that the three payment service providers “were aware that Tornado Cash users were engaging in suspicious activity, but they chose not to report these transactions to FinCEN in order to avoid regulatory scrutiny.”

The complaint concludes by alleging that Coinbase, Kraken, and Binance Pay “engaged in a pattern of racketeering activity” by continuing to integrate Tornado Cash after the sanctions were imposed.

The plaintiffs are seeking treble damages, restitution, disgorgement of profits, and a permanent injunction barring the three payment service providers from continuing to integrate Tornado Cash.