Paul Grewal, the chief legal officer at Coinbase, expressed his concerns regarding the recent filing by the U.S. Treasury that aims to dismiss the need for a final court ruling concerning Tornado Cash, after the crypto mixer was removed from the sanctions list.
On Friday, the Treasury’s sanctions oversight body took Tornado Cash off its global blacklist and also delisted more than 100 ether (ETH) addresses from the Specially Designated Nationals list. This platform had been sanctioned in 2022 due to its purported involvement in laundering $445 million linked to the Lazarus Group, a cybercrime organization associated with North Korea.
The Treasury claimed in a court filing dated March 21 that by removing Tornado Cash from the sanctions list, the matter was resolved, thus making a final judicial ruling unnecessary.
Nonetheless, Grewal argued that the Treasury’s move to declare the case moot is an effort to avoid a decision from the Fifth Circuit Court of Appeals, which might reopen the possibility of future sanctions against the crypto mixer.
“After reluctantly delisting Tornado Cash, they now assert that a final court judgment is no longer needed. But that’s not how the law operates, and they’re aware of it,” Grewal stated on X. “Under the voluntary cessation exception, a defendant’s choice to cease a challenged action only moots a case if they can demonstrate that the action cannot ‘reasonably be expected to recur.’
Coinbase was the source of funding for the court case, Van Loon vs. Treasury, which reached the appeals court.
Grewal referenced the FBI v. Fikre case as an illustration, wherein the government took Yonas Fikre, a U.S. citizen and Sudanese immigrant, off the No Fly List, arguing that this action rendered his lawsuit moot. Fikre had contended that he was unlawfully placed on this list by the government.
However, the Ninth Circuit reversed that ruling, indicating that a party seeking to moot a case due to its own voluntary cessation of behavior must show that the behavior cannot “reasonably be expected to recur.”
In the case of Tornado Cash, the Treasury has not provided any guarantees that it won’t reinstate sanctions against the crypto mixer.
“In this instance, the Treasury has also removed the Tornado Cash entities from the SDN, yet has failed to assure that it won’t relist Tornado Cash in the future. That’s insufficient and will be communicated clearly to the district court,” Grewal remarked.