Six cryptocurrency users are suing the US Treasury Department for blacklisting Tornado Cash last month, claiming the department’s sanctions watchdog overstepped its authority by barring all American citizens from using the privacy tool.

According to the suit filed in the United States District Court for the Western District of Texas, the Treasury Department’s Office of Foreign Assets Control (OFAC) lacked the legal authority to designate Tornado Cash as a sanctioned entity because it is not an entity, person, or organization.

Last month, OFAC added Tornado Cash’s wallet addresses, including smart wallet addresses, to its Specially Designated Nationals (SDN) list, claiming that the privacy mixer was a key tool for North Korean hackers who used it to launder cryptocurrency stolen from projects such as Axie Infinity. The SDN list consists of blacklisted individuals or companies who are owned by or acting on behalf of OFAC-targeted countries.

Coinbase employees Tyler Almeida and Nate Welch, Prysmatic Labs co-founder Preston Van Loon, GridPlus engineer Kevin Vitale, Ethereum supporter and angel investor Alexander Fisher, and former Amazon engineer Joseph Van Loon are among the plaintiffs (whose current employer was not disclosed). The effort is being funded by the cryptocurrency exchange Coinbase.

According to the lawsuit, each of the plaintiffs has some ether (ETH) locked in Tornado Cash, which they used for various legal purposes, including donating to Ukraine and protecting their private wallets from being traceable to their public online identities, but can no longer access due to OFAC sanctions.

The plaintiffs are also suing Treasury Secretary Janet Yellen and OFAC Director Andrea Gacki in addition to Treasury.

The plaintiffs claim that OFAC violated the Administrative Procedures Act, which governs how federal agencies develop and issue regulations, because Tornado Cash is neither property nor a foreign national/country, and thus the sanctions watchdog overstepped its authority.

The filing also claims that the plaintiffs’ First Amendment rights to “engage in important, socially valuable speech” were violated.

Preston Van Loon, Almeida, and Welch are also claiming that their Fifth Amendment rights, which protect against self-incrimination, were violated because they did not receive a notice or any other form of prior process before their ETH was frozen.

As a result, the plaintiffs are requesting that the court “declare that Defendants’ designation is null, void, and without force and effect; declare that Defendants’ designation is not in accordance with law;… vacate the designation; and permanently enjoin Defendants’ and their officers, employees, and agents from enforcing, implementing, applying, or taking any action whatsoever under, or in reliance on, the designation.”

Since its announcement last month, OFAC’s designation of Tornado Cash and its smart wallet addresses has sparked debate.

In a blog post, cryptocurrency think tank Coin Center stated that this was the first time software, rather than an individual or entity, was added to the SDN list, which the plaintiffs seized on.

“Historically, Defendants have designated individuals, corporations, and other entities on the SDN List using their delegated authority.” For example, on February 25, 2022, OFAC added Vladimir Putin to the SDN List,” according to the filing. “In addition, defendants have designated, a virtual currency mixer…, unlike Tornado Cash, is controlled centrally. In addition, unlike Tornado Cash, users do not retain custody of a specific crypto asset at all times and instead receive randomly’mixed’ crypto assets.”

Paul Grewal, Coinbase’s chief legal officer, told CoinDesk that while the exchange has “the utmost respect for Treasury and OFAC … the recent designations of the Tornado Cash smart contracts gave us serious pause.”