Key Takeaways:
- The U.S. Treasury removed Tornado Cash from its sanctions list, declaring the legal case moot, but Coinbase disputes the move, citing the potential for re-sanctioning.
- A federal court previously ruled that sanctioning Tornado Cash’s immutable smart contracts was unlawful, forcing the Treasury to delist it.
- Legal issues persist for Tornado Cash’s developers, with U.S. and Dutch authorities pursuing separate criminal cases.
The U.S. Treasury Department claims that the lawsuit challenging its sanctions on Tornado Cash is now moot, following the protocol’s removal from the sanctions list on March 21, 2025.
The sanctions were initially imposed in 2022, accusing Tornado Cash of facilitating money laundering by North Korea’s Lazarus Group.
Power does not recede voluntarily. It's gasps and it gasps until it no longer can. @USTreasury filed yet another late Friday pleading against Tornado Cash. After grudgingly delisting TC, they now claim they've mooted any need for a final court judgment. But that's not the law,… pic.twitter.com/Je8KD51X0q
— paulgrewal.eth (@iampaulgrewal) March 23, 2025
In response, six users—backed by Coinbase—sued the Treasury, arguing the sanctions on immutable smart contracts were unlawful.
A federal appeals panel sided with the plaintiffs in January 2025, prompting the Treasury to lift the sanctions.
Now, the Treasury argues there is no need for further court judgment.
However, Coinbase’s chief legal officer Paul Grewal disagrees, citing the “voluntary cessation” doctrine, which requires assurance that the government won’t reinstate the sanctions.
He referenced the 2024 Supreme Court case FBI v. Fikre as precedent, warning that without such assurance, the matter isn’t truly resolved.
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.” Friends of the Earth, Inc. v. Laidlaw Environmental Services (TOC), Inc., 528 U.S.…
— paulgrewal.eth (@iampaulgrewal) March 23, 2025
Despite the sanctions being lifted, Tornado Cash’s legal troubles persist.
Co-founders Roman Storm and Roman Semenov face U.S. charges for laundering over $1 billion in crypto, with Storm set for trial in April 2025.
In Europe, developer Alexey Pertsev was released from Dutch custody and is appealing his conviction.
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