US Treasury Faces Backlash Over Attempt To Dismiss Tornado Cash Case Without Final Ruling

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TREASURY TRYING TO SNEAK ONE PAST US? 🤣

US Treasury Faces Backlash Over Attempt To Dismiss Tornado Cash Case Without Final Ruling

Well, shucks, folks! It seems the US Department of the Treasury is trying to pull a fast one on us. They’re claiming that a final court ruling on the Tornado Cash lawsuit is moot, just because they delisted the crypto-mixing protocol from their sanctions list. But, as Coinbase’s Chief Legal Officer Paul Grewal would say, “That’s not the law, and they know it!” 🙄

US Treasury Claims Tornado Cash Case Is Moot

The US Department of the Treasury’s Office of Foreign Assets Control (OFAC) removed Tornado Cash from its Specially Designated Nationals (SDN) list on March 21. They also delisted nearly 100 Smart Contract addresses affiliated with the Ethereum-based crypto mixer. But, as Grewal noted, “After grudgingly delisting TC, they now claim they’ve mooted any need for a final court judgment.” Ah, yeah, right! 🙄

Grewal argued that “under the voluntary cessation exception, a defendant’s decision to end a challenged practice moots a case only if the defendant can show that the practice cannot ‘reasonably be expected to recur.'” And, folks, I reckon that’s a mighty big “if”! 🤔

He cited a case Supreme Court ruling from last year, FBI v. Fikre (2024), that determined the FBI didn’t moot the case despite removing the plaintiff from the No Fly List because the ban could be reinstated again in the future. Ah, now that’s what I call good ol’ fashioned justice! 😊

Based on this, the CLO considers a final court ruling on the Tornado Cash lawsuit necessary. He affirmed that the US Treasury has not assured that it won’t relist the crypto mixer in the future. “That’s not good enough, and will make this clear to the district court,” Grewal concluded. Amen to that, brother! 🙏

The Fight For Crypto Privacy

In August 2022, OFAC sanctioned Tornado Cash for “failing to impose effective controls” to prevent malicious actors from laundering funds through the crypto mixer. But, as Bitcoinist reported, the US District Court for the Western District of Texas reversed the OFAC sanctions against Tornado Cash in January. And, as Peter Van Valkenburgh, attorney and Executive Director at CoinCenter, pointed out, “The District Court will still need to decide whether the remedy is nationwide vacatur (anyone in US can use immutable contracts) or more limited relief (plaintiffs can use contracts and other parties may need to bring their own suits).” Ah, yeah, because that’s not a mess to untangle! 🤯

On Sunday, Grewal also highlighted that “Money laundering hurts people. There. So does violating the law set by Congress. And so does impugning the integrity of large numbers of software developers with broad slanders and no individualized evidence that they did anything illegal.” Preach, Paul, preach! 🙌

It’s worth noting that despite Tornado Cash’s delist from OFAC’s sanctions list, one of its founders, Roman Storm, and its developer, Alexey Pertsev, continue their legal battle against Money Laundering charges. Pertsev was detained in the Netherlands in August 2022 and convicted in May 2024. He is working on his upcoming appeal after receiving a supervised release from prison. Meanwhile, Storm, also detained in 2022, awaits his April 14 trial. Ah, good luck to those folks! 🤞

As Paradigm’s co-founder, Matt Huang, previously pointed out, “The prosecution’s case threatens to hold software developers criminally liable for the bad acts of third parties, which would have a chilling effect on crypto and beyond.” Now, that’s what I call a mighty big can of worms! 🐜

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2025-03-25 06:43