The chief legal officer of Coinbase, Paul Grewal, has taken issue with the U.S. Treasury’s attempt to dismiss the Tornado Cash lawsuit by asserting that the case is now irrelevant.
On March 21, the U.S. Treasury officially delisted Tornado Cash and several related smart contract addresses from its sanctions, thereby reversing the sanctions imposed in August 2022 by the Office of Foreign Assets Control.
Regulatory bodies had accused the platform of enabling money laundering activities, including transactions tied to North Korea’s Lazarus Group.
This action followed a ruling by a federal appeals court in November 2024, which determined that the Treasury had exceeded its authority when it sanctioned the immutable smart contracts associated with the crypto mixer.
In a statement after the March 21 decision, the Treasury Department argued that the case should now be viewed as resolved, stating that the delisting of Tornado Cash and its associated smart contracts rendered the lawsuit essentially “moot.”
The Treasury claimed that the court should consider whether it still possesses jurisdiction over the case, emphasizing that, like all federal courts, it has a “continuing obligation to satisfy itself” regarding Article III jurisdiction, thus warranting “briefing on mootness.”
However, Grewal contended in a March 24 post that this reasoning is misaligned with legal standards.
“Authorities do not relinquish power easily. They struggle and struggle until they can no longer do so […] After reluctantly removing Tornado Cash from the sanctions list, they now assert there is no need for a final court ruling. But that’s not the law, and they are aware of it.”
Paul Grewal, chief legal officer at Coinbase
Grewal argued that this situation exemplifies what is referred to in legal parlance as voluntary cessation, where a defendant ends a disputed action to evade a court ruling.
Yet, this principle applies only if there is clear assurance that the conduct will not happen again. In Grewal’s assessment, the Treasury has offered no such assurance.
He cited a 2024 Supreme Court case involving a U.S. citizen who was taken off the No Fly List. The court found that the case was not moot, as the government had not guaranteed that the individual would not be placed on the list again.
While Tornado Cash has been removed from the sanctions list, Grewal pointed out that the Treasury has provided “no assurance” it won’t be sanctioned again.
“That’s not sufficient, and we will make this clear to the district court,” he stated.
These developments follow the release of Tornado Cash developer Alexey Pertsev from prison under electronic surveillance after a Dutch court lifted his pretrial detention, allowing him to focus on his appeal.
Meanwhile, Tornado Cash co-founder Roman Storm is currently released on a $2 million bond and is set to stand trial in April. He, along with fellow co-founder Roman Semenov, was charged by U.S. authorities in August 2023 for allegedly aiding in the laundering of more than $1 billion in cryptocurrency through the platform.