Coinbase’s chief legal officer has publicly criticized the U.S. Treasury’s attempt to dismiss the Tornado Cash lawsuit by declaring the case moot.
On March 21, the U.S. Department of the Treasury officially removed Tornado Cash and several associated smart contract addresses from its sanctions list, effectively reversing the August 2022 sanctions imposed by the Office of Foreign Assets Control.
This decision came in the wake of allegations accusing the platform of facilitating money laundering activities linked to North Korea’s Lazarus Group.
The reversal followed a November 2024 ruling by a federal appeals court, which determined the Treasury had exceeded its authority by sanctioning the crypto mixer’s immutable smart contracts.
In a statement following the March 21 ruling, the Treasury Department argued that the lawsuit should now be considered resolved, claiming that since Tornado Cash and its related smart contracts had been delisted, the case was effectively “moot.”
The Treasury maintained that the court should evaluate its ongoing jurisdiction over the case, suggesting that the “continuing obligation to satisfy itself” on Article III jurisdiction matters warranted “briefing on mootness.”
However, Coinbase’s chief legal officer countered this perspective in a March 24 statement, asserting that such reasoning is not consistent with the law.
“Power does not recede voluntarily. It’s gasps and it gasps until it no longer can […] 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.”
This situation exemplifies the concept of voluntary cessation, according to the Coinbase legal officer. This legal principle highlights when a defendant terminates a disputed action to evade a court ruling.
However, this principle applies only if clear assurance is given that the behavior will not resume. The legal officer contended that the Treasury has provided no such assurance.
Citing a 2024 Supreme Court case involving a U.S. citizen removed from the No Fly List, he pointed out that the court found the case was not moot, as the government failed to guarantee that the individual wouldn’t be placed back on the list.
Even with Tornado Cash’s removal from the sanctions list, he emphasized that the Treasury has not ensured it won’t be sanctioned again.
“That’s not good enough, and will make this clear to the district court,” he stated.
These developments arrive a month after Tornado Cash developer was released from custody under electronic monitoring to focus on appealing his conviction.
In related news, Tornado Cash co-founder is currently out on a $2 million bond and is anticipated to face trial in April. He and another co-founder have been charged by U.S. authorities for allegedly aiding in the laundering of over $1 billion in cryptocurrency through the platform.
