The US Treasury is facing criticism for its handling of the Tornado Cash case. After removing the crypto mixer from its sanctions list, the Treasury claimed a final court ruling was unnecessary. This move hasn’t gone down well with everyone.
Treasury Declares Case “Moot”
The Treasury’s Office of Foreign Assets Control (OFAC) removed Tornado Cash from its sanctions list in March, following a court ruling that found the Treasury had overstepped its authority. However, the Treasury then argued in court that a final judgment wasn’t needed because Tornado Cash was already delisted.
Coinbase’s Legal Chief Pushes Back
Coinbase’s Chief Legal Officer, Paul Grewal, slammed the Treasury’s actions, arguing that a final ruling is crucial to prevent future sanctions against the protocol. He pointed to a Supreme Court case which established that simply ending a practice doesn’t automatically make a case moot if the practice could be resumed. Grewal emphasized that the Treasury hasn’t guaranteed it won’t sanction Tornado Cash again.
The Bigger Picture: Crypto Privacy and the DPRK
The Treasury maintains concerns about Tornado Cash’s alleged use in money laundering, particularly by North Korea. However, the debate highlights broader concerns about crypto privacy and the potential for overreach in regulating decentralized technologies. The initial sanctions against Tornado Cash stemmed from allegations that it had been used to launder billions of dollars, including funds linked to the North Korean hacking group Lazarus.
Ongoing Legal Battles
Despite the delisting, the legal battles continue. Tornado Cash founder Roman Storm is awaiting trial, and developer Alexey Pertsev, after serving time in prison, is appealing his conviction. The case raises serious questions about holding developers accountable for the actions of users of their technology. Experts warn that this could stifle innovation in the crypto space. The potential for a chilling effect on developers is a significant concern.
