CEX Chief Legal Officer angrily criticizes the U.S. Treasury: evading final rulings, leaving a backdoor for secondary sanctions against Tornado Cash.

On March 24, CoinDesk reported that CEX Chief Legal Officer Paul Grewal strongly criticized the U.S. Treasury Department for removing crypto mixer Tornado Cash from the Office of Foreign Assets Control (OFAC) sanctions list to circumvent the court's previous final ruling. Grewal warned that the Treasury could still reinstate sanctions against Tornado Cash at any time in the future without a judicial decision. In 2022, the U.S. Treasury Department added Tornado Cash and more than 100 Ethereum addresses associated with it to the Specially Designated Nationals List (SDN) for "assisting the North Korean hacker group Lazarus in laundering $445 million." The U.S. Department of the Treasury removed Tornado Cash from the SDN list on March 21, arguing that the move resolved the dispute and did not require a final court ruling. According to the U.S. Supreme Court's precedent, if the defendant Treasury Department claims that the case is frivolous on the ground that it "voluntarily ceases the alleged conduct," it must prove that the conduct "could reasonably be expected not to recur." Grewal noted that "the Ministry of Finance has not committed to never re-sanction Tornado Cash, which does not meet the legal requirements. The Treasury avoided an adverse decision by the Court of Appeal through a technical unblocking, but left a back door for repeated sanctions in the future. It's not a legally permissible operation, and they know it. If the case is dismissed due to the Ministry of Finance's self-correction, it will set a dangerous precedent for regulators to evade judicial accountability after arbitrary sanctions, and put crypto projects in the uncertainty that they could be blocked at any time." CEX said it will continue to push for a final judgment by the district court to prevent Tornado Cash from being sanctioned a second time. The outcome of this case will define the legal status of smart contracts and the boundaries of the regulator's sanctions. The essence of the Tornado Cash game is the collision of the cryptographic concept of "code is law" and "institutional discretion". The developers of Tornado Cash, a decentralized protocol, have long since relinquished control, but the Treasury Department is still imposing sanctions in the name of an "entity", sparking a controversy over First Amendment free speech and Fifth Amendment due process.