The intersection of free speech and developer liability in the crypto world, particularly regarding Tornado Cash protocol
If code is like free speech, does that mean coders don’t have to worry about how their work is used?
Lawmakers have long said that the crypto business helps with illegal activities like laundering money and funding terrorism. This has caused several court cases, fines, and even jail time.
Recent cases that got a lot of attention include the arrests of developers who worked on the crypto mixers Tornado Cash and Samurai Wallet and the SEC’s plans to take action against the decentralized exchange Uniswap.
After reading the above cases, I wonder whether developers are responsible for what other people do with their code. Some have even said it’s an attack on free speech.
But is code free speech? Or are some developers taking advantage of that meaning to get out of being responsible?
People in the crypto world think that code-as-free-speech is true, but is it true?
Legal Precedent: Code as Free Speech in Focus
Cindy Cohn was asked to be the lead lawyer in the Bernstein vs. Department of Justice case before the U.S. Supreme Court in 1993 by the Electronic Frontier Foundation (EFF). This non-profit group protects civil rights in the digital world.
This case was crucial for people who believe that code is free speech because it was the first time the First Amendment of the U.S. Constitution was used to say that software source code is protected speech.
Cohn said there are two views on the code-as-speech question.
Some people think that code shouldn’t be treated differently because it’s code; they believe it should be treated like a thing instead of speech. Cohn thinks that government officials mostly hold this view.
On the other hand, some people believe that once code is recognized as free speech, the government should stay out of it and not be able to control how it is used. This is a view shared by many in the crypto community.
But Cohn pointed out that more people in the crypto business agree that code should not only be free speech but also protect people:
“Crypto enthusiasts want to think of freedom of speech in code as a trump card as if you’re throwing down the joker and you win.”
“Both of these groups are incorrect,” continued Cohn.
Consequently, what parameters delineate the extent to which code constitutes free expression, and do proponents of cryptocurrencies erroneously assert safeguards?
Freedom of Expression Used to Safeguard The Code
Congress is prohibited by the First Amendment of the United States Constitution from enacting legislation that could restrict the freedoms of religion, press, assembly, or communication.
According to Cohn, the First Amendment is a powerful tool “to safeguard innovation, science, art, the capacity for communication, and ultimately to advance democracy.” Regarding the act of composing code, Cohn characterized it as a mere mode of communication: “It is merely a language through which individuals can articulate scientific concepts to one another.”
An enormous amount of mathematics and science goes into creating blockchains and cryptocurrencies. As a result, Cohn asserted that the sector’s progress would be safeguarded through free speech, highlighting that “the First Amendment places particular emphasis on protecting such inquiries.”
Furthermore, it is worth noting that open-source code is frequently developed in the crypto community. This approach enhances the code’s academic and scientific merits through transparent and collaborative development.
However, Cohn elaborated that First Amendment protection cannot be guaranteed solely based on open-source code; the creator’s intention matters most.
Freedom of speech cannot be invoked when a developer constructs code with the sole intention of profiting from circumventing the law.
Cohn emphasized that in cases where a piece of code possesses both favorable and unfavorable use cases, the code developer should not be held liable for the harmful applications of their work.
However, according to Cohn, many crypto projects claim to have a positive use case that no one implements; developers ostensibly conceal the illicit use cases by adding “frosting” to their products.
She stated that a court would “justly assert the project is embellishing” their detrimental use case and would not accept a freedom-of-speech defense due to the manifest malice.
Regulators might be deterring scientific progress.
Regulators’ actions regarding instances like Tornado Cash, Samourai Wallet, and Uniswap may have deterred legitimate open-source initiatives.
Cohn asserts that regulatory measures against cryptocurrency developers, specifically those implicated in Tornado Cash, have produced an unwarranted and “hugely discouraging effect.”
“Create a space where people feel safe to participate in these collaborative projects,” she continued, adding that regulators must do the following:
“The government isn’t supposed to scare you out of writing something specific or academic; society is better off when people are able to develop scientific ideas.”
Cohn compares prosecuting developers to “prosecuting a hammer for the sole reason that it was used to strike someone in the head.” “The usage of the hammer is what harms, not the hammer itself.”
However, it is justifiable that financial regulators such as the SEC possess the authority to restrict specific forms of expression. As an illustration, Cohn cited insider trading.
Cohn further stated that the most recent developments in the cryptocurrency industry demonstrate how “they are extending their tentacles into a more conventional academic and scientific inquiry.”
Cohn believes speech regulations must be narrowly tailored to not stay within their intended scope. Narrow tailoring is a legal principle that dictates how a law or regulation should be meticulously crafted to tackle a specific issue or accomplish a particular objective while avoiding any unwarranted encumbrance or encroachment on other rights or interests.
She stated that Tornado Cash exemplified the failure of regulators to tailor the law precisely. Although the primary objective was to address illicit transactions from North Korean hackers, the endeavor inadvertently led to developers’ apprehension, the suspension of GitHub accounts, and the elimination of the mixer’s source code.
Risky consequences of using code as speech
The ramifications of this extend beyond the realm of cryptocurrencies.
Johns Hopkins University cryptography professor Matthew Green described in a repository on GitHub titled “tornado-repositories” how the code removal prevented him from using the Tornado Cash open-source code for academic purposes.
Green stated that he “extensively used the source code for Tornado Cash and Tornado Nova to teach zero-knowledge technology and cryptocurrency privacy concepts.”
Additionally, he asserted that the code removal hurt scholarly investigation in this domain, as “the scientific and technical communities will be harmed by the loss or reduced availability of this source code.”
Uncertainty is an additional immediate consequence of regulators targeting developers.
In an interview with Bundeep Singh Rangar, CEO of digital asset firm Fineqia and venture capitalist, stated that “such legal actions introduce uncertainties that can affect investor confidence.”
Following this, “Increased legal pressures on developers may discourage investment in technology companies based in the United States, as investors may be apprehensive about potential regulatory obstacles.”
“Legal repercussions for developers’ code can threaten the fundamental liberties that propel our industry forward,” which could ultimately “stifle innovation,” according to him.
According to Rangar, although the United States generally encourages innovation and discovery, “investors may prefer jurisdictions with more transparent regulatory frameworks to circumvent ambiguities regarding developer liberties.”
In contrast to Bernstein v. Department of Justice, which established code as free expression, Cohn cautioned that the “law is fluid” and, as such, its status is susceptible to modification.
She further stated that numerous regulators believe that attempting to deter developers by “killing an open source project” is “irrelevant given that they’re pursuing securities fraud; therefore, it makes no difference; they’re also in the wrong.”
Cohn believes that “evaluating whether the First Amendment is being met or abused by what an agency does,” in addition to their ancillary effects, should be one of the primary concerns of a court.
She stated that the courts will primarily consider the regulators’ actions and objectives. Therefore, a regulator must justify any action it takes regarding speech.
As the ongoing Tornado Cash, Samourai Wallet, and Uniswap cases continue, the new limits of freedom of expression regarding code will be tested.
