Coinbase’s Paul Grewal challenges the U.S. Treasury’s position in the Tornado Cash lawsuit - IcoHolder.

Coinbase’s Chief Legal Officer, Paul Grewal, has taken aim at the U.S. Treasury Department’s attempt to dismiss the ongoing Tornado Cash lawsuit, arguing that the case is far from resolved. On March 21, the Treasury removed Tornado Cash and its associated smart contracts from its sanctions list, reversing the sanctions imposed in August 2022. The platform had been accused of enabling money laundering, including transactions tied to North Korea’s Lazarus Group. This move came after a federal appeals court ruling in November 2024, which found that the Treasury had overstepped its authority by sanctioning Tornado Cash’s immutable smart contracts.

Despite this reversal, the Treasury maintained that the case should now be considered moot. In a statement, the department suggested that since the crypto mixer was delisted from the Specially Designated Nationals list, there was no further need for judicial intervention. They further emphasized the court’s obligation to determine whether it still holds jurisdiction over the case. However, Grewal disagreed with the Treasury’s position, asserting in a March 24 post that the law does not support the Treasury’s stance. He referred to the legal concept of "voluntary cessation," where a defendant ceases the contested action in an effort to avoid a ruling, but only if there’s a clear assurance the conduct won’t recur.

Grewal pointed out that the Treasury had provided no such assurance, meaning the lawsuit should proceed. He compared the situation to a 2024 Supreme Court case where a U.S. citizen removed from the No Fly List still saw his case proceed due to the government’s failure to guarantee he would not be reinstated on the list. In this case, Grewal argued, the Treasury’s lack of assurance about re-sanctioning Tornado Cash renders the case far from moot.

This latest development follows the release of Tornado Cash developer Alexey Pertsev from prison under electronic monitoring, after a Dutch court allowed him to focus on his appeal. Meanwhile, co-founder Roman Storm, currently out on a $2 million bond, is expected to face trial in April on charges related to money laundering through the platform.