Tornado Cash Sanctions Dropped, but Fight Isn’t Over

Tornado Cash was removed from the U.S. Treasury’s SDN list on March 21. This came after a court sided with the crypto mixer, calling earlier sanctions unlawful. But even though Tornado Cash was delisted, the U.S. Treasury now says the case should be dropped. It argues that there’s no need for a final court judgement since the sanctions are gone.

Coinbase disagrees. Paul Grewal, Coinbase’s Chief Legal Officer, says the Treasury is trying to dodge legal accountability. He warns that without a final ruling, the government could simply add Tornado Cash back to the SDN list later. According to Grewal, that’s not how the law works.

Coinbase and Grewal Demand Clear Court Judgement

Paul Grewal has been vocal about the U.S. Treasury’s actions. After the sanctions were lifted, Treasury filed a motion to dismiss the lawsuit. They argued the issue is now moot. But Grewal pushed back hard, saying the matter is far from settled.

He cited a legal rule known as “voluntary cessation.” Under this rule, if a government backs off from an action, it doesn’t automatically end a legal case. They have to prove the issue won’t come back. In Tornado Cash’s case, Treasury gave no such promise. Grewal said they could re-list the protocol anytime.

So, Coinbase wants a final judgement. They want a court to make a binding decision that protects Tornado Cash and similar projects in the future.

Tornado Cash Still in Legal Crosshairs

While the SDN sanctions were lifted, Tornado Cash’s legal troubles aren’t over. Founders Roman Storm and Roman Semenov still face criminal charges. The U.S. accuses them of helping launder over $1 billion in crypto, mostly tied to North Korea’s Lazarus Group. Storm is out on bail and will face trial soon. Semenov remains a fugitive.

Alexey Pertsev, a Tornado Cash developer in Europe, was also jailed. Though recently released, he’s still appealing a money laundering conviction. So while the court ruling helped the protocol, its people are still under legal pressure. And without a final judgement, the protocol itself could end up back on the SDN list.

Why the Tornado Cash Court Judgement Matters

This case is about more than just Tornado Cash. It sets a precedent for how decentralized protocols are treated under U.S. law. Treasury tried to sanction open-source smart contracts. The court eventually ruled that Tornado Cash’s contracts aren’t property, and thus can’t be sanctioned that way.

That’s a big deal. If the court judgement stands, it could limit how the government targets other DeFi tools. But without a final ruling, the Treasury could keep trying. Grewal knows this, and that’s why he wants the court to lock in a decision.

This is about defending the future of crypto. Not just one app.

Tornado Cash’s Future Still Uncertain

Even with the delisting, the future of Tornado Cash hangs in the balance. The U.S. Treasury hasn’t promised not to come back after it. Grewal and Coinbase want to make sure they can’t. The legal process has already been long, with cases dating back to 2022.

Coinbase and other crypto defenders say this is a test case. If Tornado Cash can be punished without due process, any open-source crypto tool could be next. That’s why they’re fighting for a final court judgement — and why this story isn’t over yet.

For now, Tornado Cash is off the SDN list. But without firm legal protections, it could end up right back where it started.