Coinbase hits back as the SEC moves in on Tornado Cash
Six people are challenging the Treasury Department. Two apparently distinct narratives.
Coinbase said on September 8 that it will fund a lawsuit against the United States Treasury Department. The cryptocurrency exchange is sponsoring a lawsuit initiated by six individuals challenging Tornado Cash’s punishments. And on September 9, Gary Gensler, chairman of the Securities and Exchange Commission (SEC), indicated he was working closely with Congress to establish legislation to enhance cryptocurrency rules.
However, these two explanations are not mutually exclusive. The series of events demonstrates that governments are only reactive, as opposed to proactive, regarding decentralized Finance.
In August, the Office of Foreign Assets Control (OFAC) sanctioned Tornado Cash. Brian Armstrong, the CEO of Coinbase, said in a statement that the Treasury went too far by taking “the unprecedented action of punishing a whole technology as opposed to particular people.”
The next day, Gensler doubled down on his call for more regulation of the DeFi industry, asserting that crypto firms could not flourish without it.
Not only does his use of phrases such as “regardless of underlying technologies” reveal his lack of comprehension of crypto and blockchain technology, but his speech also sparked a backlash from the Web3 community, with many stating that government regulation is a wolf in sheep’s clothing.
In response, Jake Chervinksy, a lawyer and head of policy at the Blockchain Association, tweeted, “Crypto is a new and unique technology: how it should be governed is a significant topic for Congress (not the SEC Chair).”