Coinbase Chief Legal Officer angrily criticizes US Treasury Department for evading final ruling, leaving backdoor for Tornado Cash to face repeated sanctions

On March 24th, according to CoinDesk, Paul Grewal, Chief Legal Officer of Coinbase, strongly criticized the US Treasury Department for removing the cryptocurrency mixer Tornado Cash from the Office of Foreign Assets Control (OFAC) sanctions list to circumvent the court's previous final ruling. Grewal warns that without judicial rulings, the Ministry of Finance may still restart sanctions against Tornado Cash at any time in the future. In 2022, the US Treasury Department listed Tornado Cash and over 100 associated Ethereum addresses on the Specially Designated Nationals List (SDN) for assisting the North Korean hacker group Lazarus in laundering $445 million. The US Treasury Department removed Tornado Cash from the SDN list on March 21 and argued that this move resolved the dispute without the need for a final court ruling. According to the precedent of the US Supreme Court, if the defendant, the Treasury Department, claims that the case is meaningless on the grounds of "voluntarily ceasing the accused behavior", it must prove that the behavior is "reasonably expected not to recur". Grewal pointed out that "the Ministry of Finance has not promised never to re sanction Tornado Cash, which is not in line with legal requirements. The Ministry of Finance avoided unfavorable rulings by the appellate court through technical unblocking, but left a backdoor for future repeated sanctions. This is not a legally allowed operation, and they know it well. If this case is rejected due to the Ministry of Finance's self correction, it will set a dangerous precedent for regulatory agencies to arbitrarily revoke sanctions and evade judicial accountability, leaving the encryption project in uncertainty of being banned at any time Coinbase stated that it will continue to push for the district court to make a final judgment to prevent Tornado Cash from being subjected to secondary sanctions. The outcome of this case will define the legal status of smart contracts and the boundaries of regulatory sanctions. The essence of the Tornado Cash case game is the collision between the encryption concept of "code as law" and the "institutional discretion". As a decentralized protocol, Tornado Cash's developers have long relinquished control, but the Ministry of Finance still imposes sanctions in the name of "entity", sparking a controversy over freedom of speech under the First Amendment and due process under the Fifth Amendment of the Constitution.