Paul Grewal, the Legal Director of Coinbase, pointed out that the U.S. Department of the Treasury has not complied with the court ruling regarding Tornado Cash. The Treasury is adopting a different approach based on certain elements, failing to fully adhere to the court’s decision.
Court Ruling and Tornado Decision
The Fifth Circuit Court of Appeals declared that the Treasury’s decision to keep Tornado Cash on the Special Sanctions List was unlawful. The court stated that Tornado Cash’s smart contracts are considered “property” under the International Emergency Economic Powers Act because they cannot be deleted. This statement indicates the necessity of reevaluating the criteria that should apply during the sanctions process.
Treasury’s Enforcement Strategy
Although the Treasury has not fully implemented the court’s ruling, it plans to return the matter to the relevant units for further review. The department argued that fully complying with the ruling could pose national security concerns. The announced strategy was interpreted as an intention to evaluate the current enforcement within legal boundaries.
Grewal expressed that the Treasury has fallen short in complying with the court’s ruling.
Paul Grewal: “The Treasury’s failure to fully comply with the court ruling has increased our concerns.”
Grewal further stated that the Treasury’s efforts to make partial adjustments are inconsistent with the legal process that underlies the discussion.
The court emphasized that immutable smart contracts do not fall into the legal definition of property. This situation has created uncertainty regarding the scope of products used in sanctions enforcement and the legal criteria that will be applied. The Treasury’s current approach raises the original legal issue again.
Coinbase and other plaintiffs argued that the Treasury must comply with the ruling and stated that the legal process will continue. The involved parties demand the rule of law to be maintained in decision-making and for compliance to be closely monitored.
This incident has reignited discussions about the need for regulatory bodies to act within the framework of national security and legal responsibilities. The manner in which decisions are enforced is expected to shed light on future legal regulations.
