Key Takeaways
- The Treasury Department calls for dismissing the Tornado Cash lawsuit after removing it from the sanctions list.
- Coinbase CLO Paul Grewal argues that dismissing the case without a final judgment is unlawful.
- Grewal cites past examples where government agencies misused dismissals to avoid accountability.
Coinbase’s chief legal officer, Paul Grewal, has criticized the U.S. Treasury Department’s attempt to dismiss the Tornado Cash lawsuit.
Grewal argues that the agency is attempting to sidestep legal scrutiny rather than securing a definitive ruling that could prevent future overreach.
The controversy follows a federal appeals court decision in November 2024, which found that the Treasury had exceeded its authority by sanctioning Tornado Cash, a decentralized crypto mixer.
The ruling clarified that smart contract-based services do not inherently violate U.S. laws.
Treasury Declares Case Moot, Grewal Pushes Back
On March 21, the Treasury officially removed Tornado Cash from the Office of Foreign Assets Control (OFAC) sanctions list, nearly two years after blacklisting the protocol.
In doing so, the department argued that the lawsuit should now be dismissed as “moot” since the contested sanctions are no longer in place.
The Treasury maintains that because Tornado Cash has been removed from the list of specially designated nationals, the case no longer requires a ruling.
However, Grewal disagrees, calling the move a strategic plot to avoid legal precedent that could limit the agency’s future actions.
Coinbase’s Legal Chief Demands Final Judgment
Grewal insists that a final court ruling is necessary to prevent the Treasury from arbitrarily sanctioning entities without clear legal constraints.
Without a judicial decision, he warns, the government could reimpose sanctions at any time, leaving the crypto industry vulnerable to regulatory uncertainty.
“Power does not recede voluntarily,” Grewal wrote in an X post on Monday. “Late Friday, the Treasury filed yet another pleading to dodge a final court judgment. But that’s not the law, and they know it.”
He referenced the Supreme Court case FBI v. Fikre (2024), in which the FBI failed to moot a case despite removing the plaintiff from the No Fly List.
The court ruled that voluntary cessation of a disputed action does not automatically invalidate legal challenges unless the government guarantees the action will not recur.
Similarly, Grewal argues that while the Treasury has removed Tornado Cash from the SDN list, it has provided no assurances that it won’t relist the protocol in the future.
“That’s not good enough,” he stated. “We will make this clear to the district court.”
Prashant Jha is a seasoned crypto journalist based in Delhi, India, with a Bachelor’s Degree in Computer Science Engineering. Passionate about the evolving world of blockchain and cryptocurrencies, he has been a dedicated voice in the industry since 2018. Prashant’s expertise lies in regulatory reporting, where he unravels complex legal and financial developments with clarity and precision. Before joining CCN in 2024, he honed his craft at Cointelegraph, establishing himself as a trusted name in crypto journalism.
His coverage spans major industry events, including the high-profile collapses of FTX, Three Arrows Capital (3AC), and LUNA, offering readers insightful analyses of their regulatory and market implications. Prashant’s technical background enables him to bridge the gap between intricate blockchain technology and its real-world applications, making his work accessible to novices and experts.
Beyond his professional pursuits, Prashant is an avid music enthusiast, often exploring diverse genres to unwind. A sports lover, he has a particular passion for cricket and frequently engages in discussions about the game. His multifaceted interests and sharp journalistic instincts make him a valuable contributor to CCN, where he continues shaping the crypto landscape's narrative.
