Coinbase’s Legal Head Paul Grewal condemns U.S. Treasury Department for its disregard of court orders to delete Tornado Cash smart contracts from blocked assets list. Through his social media posts Grewal highlights how industry and government authorities now stand apart when enforcing sanctions rules.

In reaction to the Fifth Circuit ruling Grewal emphasizes that Tornado Cash did not have any property that needed U.S. Court protection. The court took this action because the sanctioned contracts leave the SDN list. The Treasury department staff requires more time to follow the court decision.

We now know why @USTreasury was so quiet yesterday. It turns out that the district court's electronic docket was down. Fine– these things happen. Not so fine–once again they want to ignore Congress' explicit instructions and substitute it's own view of the law on how to… pic.twitter.com/riCadgFMxo

— paulgrewal.eth (@iampaulgrewal) March 18, 2025

Treasury Claims Tornado Cash Still a Laundering Threat

The Treasury thinks the Fifth Circuit ruling does not affect its sanctions power over Tornado Cash because this ruling only covers its unchangeable codes. The government department explained in their legal papers that taking certain smart contracts off the list before complete review would endanger national security. 

Officials indicate cryptocurrency mixers known as Tornado Cash remain a threat to fight against financial crimes through money laundering activities of the Lazarus Group with its North Korea affiliates.

The Treasury Department noted in 2021 that crypto-washing payment processors mixed 65.1% of the digital money North Korea spent. The agency believes its controlled steps help prevent financial crimes that can happen with cryptos when people stay anonymous.

Grewal argued the Treasury failed to follow official laws and put their own view of regulations into practice. The organization requests trust to handle security operations without revealing their specific motives. 

Grewal emphasized that no progress has been made by their actions. He indicated that Coinbase will file a new legal response that supports the court’s findings and opposes how Treasury deals with cryptocurrencies.

Coinbase and Crypto Leaders Oppose Treasury’s Stance

The ongoing legal battle about Tornado Cash status now brings separate lawsuits against its developers. Alexey Pertsev completed his electronic monitoring period after being convicted for laundering $1.2 billion through Tornado Cash platform since he now prepares his appeal against the conviction. 

Dear Friends, on Friday 7 February at 10 am I will be free! It is not real freedom, but it is better than prison. Today, a Dutch court suspended my pretrial detention under the condition of electronic monitoring. This will give me a chance to work on my appeal and fight for…

— Alexey Pertsev (@alex_pertsev) February 6, 2025

His case causes people to focus on why developers should face consequences when people misuse open-source tools. As the legal proceedings continue in both the U.S. and the Netherlands regarding Tornado Cash, Roman Storm pursues a new motion to cancel the prosecution against him. 

According to him Tornado Cash does not meet the criteria of a financial institution and he should not be associated with banking legislation. Prosecutors view Storm as one of the main operators who must take responsibility for Tornado Cash involvement in illegal transactions.

The crypto market faces its biggest legal challenge to determine how to handle cases involving Tornado Cash. The eventual ruling will create new guidelines on how financial authorities need to handle DeFi platforms and their open-source creators. The crypto community leaders including Coinbase assert their position against the Treasury making this case a pivotal moment in cryptocurrency law.

The United States Treasury keeps its original stand despite continued opposition from Coinbase and other cryptocurrency supporters. The legal fight over Tornado Cash will determine both its future survival and the rights people have to keep their digital finances and privacy private.