The US Treasury Department has declared that a final court judgment in the contentious Tornado Cash lawsuit is unnecessary. This follows their removal of the crypto entity from the sanctions list on March 21, after a court ruling in its favor. Initially, the Treasury’s Office of Foreign Assets Control (OFAC) had sanctioned Tornado Cash in August 2022, accusing it of facilitating cypto-laundering activities for the North Korean hacker group, Lazarus.
Post the sanctioning, many users of Tornado Cash had instituted a lawsuit against the department. However, with Tornado Cash now off the sanctions list and its affiliated smart contract addresses removed from the Specially Designated Nationals (SDN) list, the Treasury asserts that the legal deliberations are essentially moot.
Coinbase’s Chief Legal Officer, Paul Grewal, contests the department’s position, stating that their decision to delist Tornado Cash should not nullify the necessity of a final court judgment, as per legal procedures. The possibility of relisting Tornado Cash on the sanctions list, without the provision of any assurance from the Treasury on the contrary, fuels the argument for a final judgment.
The lawsuit, initiated by six Tornado Cash users, including Ethereum’s core developer Preston Van Loon, and supported by Coinbase, was followed by another similar suit filed by Crypto policy advocacy group Coin Center, in 2022. An initial ruling by a Texas federal court in favor of the US Treasury was later overthrown by a three-judge panel in November, terming the sanctions on Tornado Cash’s smart contracts as unlawful. Following the panel’s judgment, the Treasury had a 60-day window to challenge the decision and opted to do so, albeit unsuccessfully. As a result, the sanctions were lifted on March 21.
However, co-founders of Tornado Cash, Roman Storm and Roman Semenov, continue to be embroiled in legal struggles. Charged with aiding and abetting multibillion-dollar crypto laundering through Tornado Cash, Semenov remains on the run, while Storm, currently out on a $2 million bond, is expected to face trial in April. Meanwhile, Tornado Cash developer Alexey Pertsev, who had been serving prison time after being convicted of money laundering, was released after a Dutch court suspended his “pretrial detention” pending an appeal.