- US Treasury drops Tornado Cash sanctions, seeking dismissal of ongoing lawsuit.
- Coinbase challenges Treasury’s bid to avoid final judgment in Tornado Cash case.
- Tornado Cash co-founders face legal charges despite the reversal of the Treasury sanctions.
The U.S. Department of the Treasury recommends dismissing all legal objections to its Tornado Cash sanctions after delisting the crypto mixer on March 21. According to the Treasury, the case is irrelevant because the platform sanctions ended, and both the platform and its linked smart contracts have been removed from the OFAC Specially Designated Nationals (SDN) list.
The cryptocurrency mixing platform Tornado Cash was sanctioned because US authorities accused it of supporting North Korean Lazarus Group cryptocurrency laundering operations. In November 2024, a federal appeals court ruled that the sanctions were unlawful, prompting the Treasury to remove Tornado Cash from its list. The department declared that judicial involvement is no longer essential for this matter.
Legal Experts Challenge Treasury’s Request for Dismissal
Legal experts, including Coinbase’s Chief Legal Officer Paul Grewal, have criticized the Treasury Department’s dismissal request. According to Grewal, the Treasury Department aims to evade a court decision that could establish a legal benchmark for future legal challenges. Additionally, the Treasury’s decision to drop the sanctions does not guarantee that Tornado Cash will not be sanctioned again. He referenced the “voluntary cessation” legal principle, which stipulates that a case may only be considered moot if the defendant can provide assurance that the disputed action will not recur.
Grewal emphasized that although the Treasury lifted the sanctions, it has not made any such guarantees. He highlighted a Supreme Court ruling concerning Yonas Fikre, a U.S. citizen placed on the No Fly List; the Court determined that the government cannot simply dismiss a case by removing an individual from the list unless it can guarantee that the issue will not arise again.
Related: Tornado Cash Sanctions Overturned: Major Victory for Privacy
Ongoing Legal Strife for Tornado Cash Founders
Despite the Treasury’s actions, Tornado Cash’s legal issues continue. The platform’s co-founders, Roman Storm and Roman Semenov, still face charges for allegedly facilitating the laundering of over $1 billion through the platform. Semenov remains at large and is on the FBI’s most wanted list, while Storm is out on a $2 million bond and is scheduled to face trial in April.
In addition, Tornado Cash developer Alexey Pertsev, who faced legal challenges in the Netherlands, was recently released under electronic monitoring after a Dutch court suspended his pretrial detention. Pertsev is preparing to appeal his conviction for money laundering related to the crypto mixer.
