TechFlow news, March 24 — According to Cointelegraph, the U.S. Department of the Treasury stated that legal challenges against it should now be considered "moot" following its removal of the cryptocurrency mixer service Tornado Cash from its sanctions list on March 21. The Treasury said in a statement: "Because this court, like all federal courts, has a continuing obligation to ensure it possesses Article III jurisdiction under the Constitution, debate over the 'mootness' issue is necessary."
However, Coinbase Chief Legal Officer Paul Grewal argued that the Treasury's attempt to declare the case moot before an official ruling does not align with proper legal procedure. He stated: "After reluctantly removing Tornado Cash from the list, they now claim there’s no need for a final court judgment. But that’s not how the law works, and they know it."
Grewal noted: "Under the 'voluntary cessation exception,' a defendant's decision to end a challenged practice only renders a case moot if the defendant can demonstrate that the conduct 'could not reasonably be expected to recur.'" He cited a 2024 Supreme Court ruling which held that removing U.S. citizen Yonas Fikre from the no-fly list did not render his legal claims moot, as the restriction could potentially be reimposed in the future.
"Here, the Treasury has similarly removed Tornado Cash entities from the Specially Designated Nationals (SDN) list but has offered no assurance that they won’t be relisted. That is insufficient, and we will make this clear to the district court," Grewal added.
In August 2022, the Office of Foreign Assets Control (OFAC) of the U.S. Department of the Treasury sanctioned Tornado Cash, accusing the protocol of aiding North Korea's hacker group "Lazarus" in money laundering. Subsequently, multiple Tornado Cash users filed lawsuits against the regulator. After courts issued rulings favorable to Tornado Cash, the U.S. Treasury removed the mixing service from its sanctions list on March 21, deleting dozens of Tornado-related smart contract addresses from the SDN list.
