Paul Grewal, Chief Legal Officer at Coinbase, has criticized a recent U.S. Treasury filing that seeks to nullify the necessity of a final court judgment for Tornado Cash, following its delisting from the sanctions roster.
On Friday, the Treasury Department's sanctions authority removed Tornado Cash from its global blacklist and cleared over 100 ether (ETH) addresses from the Specially Designated Nationals list. The crypto mixer had been sanctioned in 2022 due to its purported involvement in laundering $445 million allegedly stolen by the North Korea-linked Lazarus Group.
In a court filing dated March 21, the Treasury posited that eliminating Tornado Cash from the sanctions list rendered further legal action unnecessary. However, Grewal contends that the Treasury's effort to moot the case is aimed at circumventing a looming decision from the Fifth Circuit Court of Appeals, potentially leaving room for future blacklisting and sanctions.
"After reluctantly delisting Tornado Cash, they now argue there's no need for a final judgment. But that's not how the law works," Grewal stated on X. He argued that the voluntary cessation doctrine requires a defendant to prove that a halted practice is unlikely to reoccur for a case to be considered moot.
Coinbase financially supported the case that advanced to the appeals court, Van Loon vs. Treasury. Grewal referenced the FBI v. Fikre case, where the government attempted to moot a lawsuit by removing Yonas Fikre from the No Fly List inadvertently. The Ninth Circuit overturned this, arguing the government must prove the contested action is unlikely to happen again.
Grewal highlighted that in Tornado Cash's scenario, the Treasury has not guaranteed against future sanctions. "Just as the Tornado Cash entities have been removed from the SDN, there's no promise they won't be re-listed. This is insufficient, and we will emphasize this to the district court," he concluded.