Source: Cointelegraph Original: "{title}"
The US Treasury Department stated that following its removal of the cryptocurrency mixer Tornado Cash from the sanctions list, the lawsuit against its sanctions on Tornado Cash no longer requires a final court ruling.
In August 2022, the Treasury's Office of Foreign Assets Control (OFAC) imposed sanctions on Tornado Cash, accusing the protocol of assisting the North Korean hacking group Lazarus Group in laundering stolen cryptocurrency, which led several Tornado Cash users to file lawsuits against the regulators.
After a favorable ruling for Tornado Cash from the court, the US Treasury removed the mixer and its dozens of associated smart contract addresses from the Specially Designated Nationals (SDN) list on March 21, arguing that "the case is now moot."
With Tornado Cash removed from the sanctions list, the Treasury argued that this lawsuit no longer requires a final court ruling. Source: Paul Grewal
The US Treasury stated: "As this court, like all federal courts, has a continuing obligation to ensure it has jurisdiction over cases as prescribed by Article III of the Constitution, it is necessary to brief whether the case is moot."
However, Coinbase Chief Legal Officer Paul Grewal pointed out that the Treasury's desire to declare the case moot before a formal ruling is not the correct legal procedure.
"After reluctantly removing Tornado Cash from the sanctions list, they now claim that any final court ruling has become moot. But that is not what the law provides, and they know it," he said.
"Under the 'voluntary cessation exception' principle, a defendant's decision to cease the challenged conduct can only render a case moot if they can demonstrate that the conduct 'reasonably can be expected not to recur.'"
Grewal cited a 2024 Supreme Court ruling that determined that a lawsuit brought by US citizen Yonas Fikre due to being placed on a no-fly list does not become moot simply because he was removed from the list, as the ban could be reinstated in the future.
Source: Paul Grewal
Grewal stated: "In this case, the Treasury similarly removed the Tornado Cash entity from the SDN list but did not guarantee that it would not be placed back on the list. That is not enough, and we will make this clear to the district court."
In September 2022, with the support of Coinbase, six Tornado Cash users led by Ethereum core developer Preston Van Loon filed a lawsuit against the Treasury to lift the sanctions, arguing that the sanctions were illegal. The cryptocurrency policy advocacy group Coin Center subsequently filed a similar lawsuit in October 2022.
In August 2023, a federal judge in Texas sided with the US Treasury, ruling that Tornado Cash is an entity that can be designated under OFAC regulations. However, in a November appeal, a panel of three judges ruled that the Treasury's sanctions on Tornado Cash's immutable smart contracts were illegal.
The US Treasury has 60 days to appeal the ruling, and it did indeed file an appeal; however, US courts supported Tornado Cash, overturning the sanctions on January 21 and forcing the government agency to lift the sanctions by March.
However, the founders of Tornado Cash still face legal disputes. In August 2023, the US sued Roman Storm and his co-founder Roman Semenov, accusing them of assisting in laundering over $1 billion in cryptocurrency through Tornado Cash. Semenov is currently at large and is on the FBI's most-wanted list. Storm was released on a $2 million bail and is expected to stand trial in April.
Meanwhile, Tornado Cash developer Alexey Pertsev was released after a Dutch court suspended his "pre-trial detention," and he is preparing to appeal the money laundering charges.
Related: Trump Crypto Council Chair: US Stablecoin Legislation May Be Introduced in the Next Two Months
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