Key Takeaways
- Grewal argues that by removing the crypto mixer from its sanctions list, the Treasury is trying to avoid legal scrutiny while retaining the ability to reimpose sanctions in the future.
- He noted that the Treasury has not provided assurances that it will not blacklist Tornado Cash again.
Coinbase’s Chief Legal Officer, Paul Grewal, has criticized the U.S. Treasury Department for attempting to sidestep a final court ruling in the Tornado Cash case. Grewal argues that by removing the crypto mixer from its sanctions list, the Treasury is trying to avoid legal scrutiny while retaining the ability to reimpose sanctions in the future.
“Late Friday, the Treasury filed yet another pleading to dodge a final court judgment. But that’s not the law, and they know it,” Grewal wrote on X. He pointed to the Supreme Court case FBI v. Fikre, where the government failed to moot a case after removing an individual from the No Fly List without guaranteeing they would not be relisted. Similarly, Grewal contends that the Treasury’s actions leave open the possibility of renewed sanctions.
Tornado Cash was originally blacklisted in August 2022, facing allegations that it facilitated money laundering, including $445 million linked to North Korea’s Lazarus Group. The Treasury’s Office of Foreign Assets Control (OFAC) further sanctioned more than 100 ETH addresses associated with the platform.
In November 2024, the Fifth Circuit Court of Appeals ruled that the Treasury had exceeded its authority in sanctioning Tornado Cash, determining that its smart contracts could not be considered “property” under the law. Following this decision, the Treasury delisted Tornado Cash on March 21, 2025, and claimed that the lawsuit was now moot.
Grewal, however, dismissed this argument. “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,’” he said. He noted that the Treasury has not provided assurances that it will not blacklist Tornado Cash again.
Coinbase has been involved in legal efforts against the Treasury’s actions. The exchange backed a lawsuit filed by six Tornado Cash users, including Ethereum developer Preston Van Loon, in September 2022. Crypto advocacy group Coin Center also launched a separate legal challenge in October 2022.
While a Texas federal court initially ruled in favor of the Treasury in August 2023, the Fifth Circuit later overturned the decision, leading to the delisting of Tornado Cash.
Tornado Cash Co-founders Roman Storm and Roman Semenov were charged in 2023 with allegedly facilitating over $1 billion in money laundering. Semenov remains at large, while Storm is currently awaiting trial.
