US Treasury’s Tornado Cash Drama: A Legal Whirlwind You Can’t Miss!

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So, the U.S. Treasury decided to play nice and drop Tornado Cash from its naughty list. 🎉 This comes after OFAC, the fun police of finance, slapped sanctions on the crypto mixer in August 2022, accusing it of laundering money for North Korea’s favorite hackers, the Lazarus Group. Cue the lawsuits from Tornado Cash users who were like, “Excuse me, what?!”

Legal Drama: The Treasury’s “Oops, Never Mind” Moment

After a court ruling that basically said, “Nice try, Treasury,” the U.S. Treasury reversed its decision on March 21. They lifted the sanctions and removed some smart contract addresses from the Specially Designated Nationals (SDN) list. Now, they’re claiming the case is “moot” because, you know, they fixed it. 🙄

But Paul Grewal, Coinbase’s Chief Legal Officer, isn’t buying it. He’s like, “Hold up, Treasury. You can’t just say ‘moot’ and expect us to forget about it.” He pointed out that the “voluntary cessation” exception means the case isn’t moot unless the Treasury can prove they won’t do it again. Spoiler: They can’t.

Grewal even brought up a Supreme Court case from 2024 where a guy got taken off the No Fly List, but the Court said, “Nope, this isn’t over.” Same logic applies here. Just because Tornado Cash is off the list now doesn’t mean it won’t end up back on it later. 🎢

The lawsuit was filed in September 2022 by a group of Tornado Cash users, including Ethereum developer Preston Van Loon, who basically said, “This is unfair.” Coin Center, a crypto advocacy group, also joined the party with their own lawsuit in October 2022.

A Texas court initially sided with the Treasury in August 2023, but a three-judge panel was like, “Nah, that’s not cool,” and overruled it in November. After the Treasury’s 60-day window to challenge the decision expired, the court forced them to remove the sanctions by March. 💥

Founders’ Legal Woes: The Plot Thickens

Meanwhile, the founders of Tornado Cash are still in hot water. In August 2023, U.S. authorities charged Roman Storm and Roman Semenov with laundering over $1 billion in crypto. Semenov is now on the FBI’s most-wanted list, while Storm is out on a $2 million bond, waiting for his trial in April. 🕵️‍♂️

And let’s not forget Alexey Pertsev, a Tornado Cash developer who was released from prison after a Dutch court suspended his pretrial detention. He’s gearing up to appeal his money laundering conviction. 🚀

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2025-03-24 18:31