Coinbase CLO Condemns US Treasury Statement That Tornado Cash Ruling Is Moot
Grewal cautions that without a final court ruling, there is no guarantee that Tornado Cash will not be sanctioned again in the future.
Omkar Godbole | Edited by Nikhilesh De , Mar 24, 2025 1:24 PM UTC
Key points:
- Coinbase's chief legal officer, Paul Grewal, has criticized the US Treasury Department for trying to circumvent the Tornado Cash ruling by removing it from its global blacklist.
- In 2022, the US Treasury Department blacklisted Tornado Cash for its alleged involvement in laundering $445 million stolen by the North Korean cybercrime group Lazarus, but an appeals court ruled that listing some smart contracts was unconstitutional.
- Despite the delisting, Grewal cautions that absent a final court ruling, there is no guarantee that Tornado Cash will not be sanctioned again in the future.
Paul Grewal, chief legal officer of crypto exchange Coinbase (COIN), expressed his displeasure over a recent statement from the US Treasury Department that casts doubt on the need for a final court ruling on Tornado Cash after the crypto mixer was removed from the sanctions list.
On Friday, the U.S. Treasury Department’s sanctions watchdog removed Tornado Cash from its global blacklist and also removed more than 100 ether (ETH) addresses from its list of specially designated nationals. The platform was added to the list in 2022 for its alleged role in laundering $445 million stolen by the North Korea-linked Lazarus cybercrime group.
According to the court's March 21 filing, the Treasury Department then indicated that Tornado Cash's removal from the sanctions list had resolved the existing problem and that a final court order ordering the crypto mixer to be removed from the sanctions list was no longer necessary.
However, Grewal insists that the Treasury Department's efforts to invalidate the case are an attempt to circumvent the Fifth Circuit Court of Appeals' ruling, which leaves open the possibility of re-blacklisting and sanctions.
“After reluctantly removing TC from the list, they now claim to be questioning the need for a final court order. That is not in accordance with the law, and they know it,” Grewal wrote in X. “Under the voluntary cessation exception, a defendant’s decision to cease a challenged practice only calls the case into question if the defendant can show that the practice cannot ‘reasonably be expected to recur.’”
Coinbase funded a lawsuit that made it to the appellate court, Van Loon v. Treasury.
Grewal cited the case of FBI v. Fikre, in which the government removed Yonas Fikre, a U.S. citizen and Sudanese exile, from the no-fly list and argued in court that the action invalidated Fikre’s lawsuit. Fikre had filed the lawsuit, arguing that the government had illegally placed him on the no-fly list.
However, the Ninth Circuit reversed, holding that a party seeking to bring a case based on its voluntary cessation of the impugned conduct must prove that “the conduct cannot reasonably be expected to recur.”
In the case of Tornado Cash, the Treasury Department has not provided any assurances that it will not impose further sanctions against the crypto mixer.
“In this case, the Treasury also removed Tornado Cash from the SDN but offered no assurance that it would not list Tornado Cash again. This
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