The U.S. Treasury Department says it doesn’t require a final court ruling for a tornado cash sanctions after dropping the code mixer from the sanctions list.
In August 2022, managers at the Ministry of Finance’s Foreign Assets Bureau (OFAC) approved tornado cash, leading to many tornado cash users who filed lawsuits against regulators after North Korean hacking crew allegedly stolen by the Lazarus Group.
After the court ruled in favor of tornado cash, the US Treasury dropped the mixer from the mixer list on March 21, removing dozens of tornado-related smart contract addresses from the specially designated Nationals (SDN) list.
The US Treasury argues that the lawsuit does not require a final court ruling because tornado cash has been removed from the sanctions list. Source: Paul Grewal
“The Mutines explanation is justified because this court, like all federal courts, has an ongoing obligation to satisfy its Section 3 jurisdiction over the proceedings,” the U.S. Treasury Department said.
However, Coinbase Chief Legal Officer Paul Grawal said before making an official ruling that the Treasury’s wish for the case to declare a dispute was not a correct legal process.
“After repealing the TC in a grumpy mood, they now argue that they have discussed the need for a final court decision. But that’s not the law and they know that,” he said.
“Under the exception of voluntary suspension, the defendant’s decision to end the challenged practice only if the defendant can demonstrate that it cannot be “reasonably expected to recur” is misleading the case. ”
Grewal pointed to a 2024 Supreme Court ruling that found legal complaints from Yonas Fikre, a US citizen on the no fly list.
Source: Paul Grewal
“Here, the Treasury has similarly removed tornado cash groups from SDN, but it doesn’t provide any assurance that it won’t relist the tornado cash again. That’s not enough and will make this clear to the district court,” Grewal said.
Six Tornado Cash users, led by Ethereum core developer Preston Van Loon, sued the Treasury in September 2022, with the support of Coinbase, sued the Treasury in September 2022, overturning sanctions under the argument that they were illegal.
The Crypto Policy Advocacy Group Coin Center continued in October 2022 in a similar lawsuit.
In August 2023, a Texas Federal Court judge sided with the US Treasury Department and determined that tornado cash was an entity that could be designated in accordance with OFAC regulations. In its appeal, a three-judicial panel ruled in November that the Treasury sanctions on Crypto Mixer’s immutable smart contracts were illegal.
The US Treasury had a 60-day window to challenge the decision. However, US courts overturned the sanctions on January 21, forcing government agencies to remove the sanctions by March, sided with tornado cash.
Related: US Treasury Department Under Trump Can Take a Different Approach to Tornado Cash
But its founder is still facing legal disputes. The US indicted Rome Storm and co-founder Roma Semenov in August 2023, accusing him of washing more than $1 billion in code through tornado cash.
Semenov is still large and is on the FBI’s most wanted list. Storm is free on $2 million bonds and is expected to face trial in April.
Meanwhile, Tornado cash developer Alexei Pertsev was released from prison after a Dutch court stopped his “pretrial detention” when he prepared to appeal his money laundering conviction.
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