US Treasury Department seeks to challenge lifting of sanctions on Tornado Cash

What’s new? Chief legal officer of the leading US centralized crypto exchange (CEX) Coinbase Paul Grewal has reported that the US Treasury Department is trying to challenge the lifting of sanctions against crypto mixer Tornado Cash. Thus, on March 21, officials filed a motion seeking to challenge a court ruling that found the Treasury Department exceeded its authority by imposing sanctions on immutable smart contracts deployed by the mixer’s developers.

Source: X.com

What else is known? In January 2025, the US District Court for the Western District of Texas ruled to vacate the decision to impose sanctions on Tornado Cash and remand the case for a new trial.

The court ruled that immutable smart contracts are not the property of a foreign person or entity and therefore cannot be subject to economic restrictions.

Then on March 21, the US Treasury removed Tornado Cash’s website and ETH address from the sanctions list.

According to Grewal, the Treasury’s attempt to challenge the decision is not legally correct.

“After grudgingly delisting TC, they now claim they’ve mooted any need for a final court judgment. But that’s not the law, and they know it.Here, Treasury has likewise removed the Tornado Cash entities from the SDN, but has provided no assurance that it will not re-list Tornado Cash again. That’s not good enough, and will make this clear to the district court,” Grewal said.

Six Tornado Cash users, led by Ethereum core developer Preston Van Loon and backed by Coinbase, sued the Ministry of Finance in September 2022 to have the sanctions lifted, arguing that they were illegal. Lobbying group Coin Center filed a similar lawsuit in October 2022.

In August 2023, a federal court judge in Texas sided with the Treasury Department, ruling that Tornado Cash was an entity that could be designated under the Treasury Department’s Office of Foreign Assets Control (OFAC) rules.

Later on appeal, a three-judge panel ruled that the sanctions against the crypto mixer’s immutable smart contracts were unlawful.

The Treasury Department had a 60-day window to challenge the ruling, which it did; however, the court sided with Tornado Cash, overturning the sanctions and forcing the agency to lift them by March.

However, the mixer’s developers are still facing legal challenges. The US indicted Roman Storm and Roman Semenov in August 2023, accusing them of helping to launder more than $1 billion in cryptocurrency.

Semenov is still at large and on the FBI’s most wanted list. Storm is free on $2 million bail and is expected to go on trial in April.

Another Tornado Cash developer, Alexey Pertsev, was released from jail after a Dutch court suspended his “pre-trial detention” while he prepared to appeal his money laundering charge.