The Great Tornado Cash Debacle: A Legal Comedy of Errors

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In a twist befitting the grandest of tragicomedies, the United States has, in its infinite wisdom, lifted the sanctions on the notorious crypto mixer, Tornado Cash. Yet, like a cat with nine lives, this decision has ignited a firestorm of outrage that would make even the most stoic bureaucrat raise an eyebrow. In a recent post on X, Coinbase’s Chief Legal Officer, Paul Grewal, has taken up the mantle of a modern-day Cassandra, lambasting the U.S. Treasury for its clumsy dance around a final ruling on the matter.

Grewal’s critique is sharp, like a well-honed blade, as he points out the Treasury’s audacious attempt to continue its legal crusade against Tornado Cash, despite its removal from the Specially Designated Nationals (SDN) list. The Treasury, in a stroke of bureaucratic genius, now claims that a final court decision is an unnecessary burden. Grewal, however, stands firm, asserting that this is nothing short of a mockery of legal procedure.

“Relying on that decision, the Fifth Circuit rejected an agency’s argument that its withdrawal of a determination ‘unilaterally and avoid judicial review’ did not moot the case, because the agency could decide to revisit the decision and issue a similar determination against the…”

— paulgrewal.eth (@iampaulgrewal) March 23, 2025

He further elucidates that such legal maneuvers are only valid if the defendant can prove that the issue will not rear its ugly head again. Grewal recalls past instances where sanctions were lifted, yet the case remained open, allowing for the ominous shadow of reimposition to loom large.

“Here, Treasury has likewise removed the Tornado Cash entities from the SDN, but has provided no assurance that it will not re-list Tornado Cash again. That’s not good enough, and will make this clear to the district court,” Grewal remarked, his tone dripping with the weight of legal history.

Grewal’s scathing remarks come amid a protracted legal battle, where users of Tornado Cash have bravely challenged the Treasury’s decision to ensnare the mixer in the SDN web. These users argue, with the fervor of revolutionaries, that the smart contract does not qualify as property under the International Emergency Economic Powers Act (IEEPA) due to its non-erasable nature.

Although the court has sided with the users, clarifying the status of the Tornado’s smart contract, Grewal remains unimpressed, criticizing the Treasury for its failure to fully embrace the court’s ruling. It’s a bit like being told you’ve won the lottery only to find out the prize is a lifetime supply of broccoli.

Tornado Cash has found itself in the corner of the ring, bolstered by the likes of Coinbase and the Ethereum Foundation, who are rallying behind lead developer Alexey Pertsev’s defense. The legal skirmish has been nothing short of intense, with supporters claiming the Treasury’s actions are as unjust as a summer storm on a picnic day, devoid of clear legal grounding.

Indeed, the lifting of sanctions against Tornado Cash is but a single act in the grand play of the ongoing debate over the regulation of crypto mixers. The stage is set, the players are in motion, and the audience waits with bated breath for the next act in this unfolding drama.

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2025-03-24 06:28