The US Treasury Department faces mounting criticism over its attempt to dismiss the Tornado Cash lawsuit without securing a final court ruling, marking a crucial moment for crypto privacy rights. This development comes just days after the historic lifting of Tornado Cash sanctions, which had initially sent shockwaves through the crypto community.
Treasury’s Controversial Dismissal Attempt
On March 21, 2025, the Office of Foreign Assets Control (OFAC) removed Tornado Cash from its Specially Designated Nationals (SDN) list, along with approximately 100 associated Ethereum smart contract addresses. However, the Treasury’s subsequent move to declare the case moot has sparked significant pushback from industry leaders.
Legal Implications and Industry Response
Coinbase’s Chief Legal Officer, Paul Grewal, has emerged as a vocal critic of the Treasury’s position. Citing the ‘voluntary cessation exception’ doctrine and the recent FBI v. Fikre (2024) precedent, Grewal argues that simply delisting Tornado Cash doesn’t eliminate the need for a definitive court ruling.
Privacy vs. Regulation: The Ongoing Debate
The case highlights the delicate balance between privacy rights and regulatory oversight in the crypto sphere. Since its 2022 sanctions, Tornado Cash has been at the center of a broader discussion about privacy tools in cryptocurrency, with over $7 billion in transactions processed through the protocol.
Developer Legal Challenges Continue
Despite the protocol’s delisting, Tornado Cash developers Roman Storm and Alexey Pertsev continue facing legal challenges. Their cases represent a critical precedent for developer liability in the crypto space, with potential implications for future privacy-focused projects.
Frequently Asked Questions
- What is the current status of Tornado Cash?
The protocol has been removed from OFAC’s sanctions list but faces ongoing legal challenges. - Why is a final court ruling important?
It would establish clear precedent for similar privacy protocols and prevent potential future sanctions. - What are the implications for crypto developers?
The outcome could determine the extent of developer liability for how their code is used by third parties.