HomeTechThe U.S. Treasury Misinterprets Court Ruling on Tornado Cash

The U.S. Treasury Misinterprets Court Ruling on Tornado Cash

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The U.S. Treasury’s decision to lift sanctions on Tornado Cash has sparked criticism from Coinbase CLO Paul Grewal, who argues that the move undermines legal procedures and lacks assurance of future compliance.

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U.S. Treasury’s Decision Sparks Criticism from Coinbase CLO Paul Grewal

The U.S. Treasury recently lifted sanctions on crypto mixer ‘Tornado Cash,’ a platform accused of laundering over $7 billion in illicit funds, including those linked to North Korean hackers. However, this decision has sparked strong criticism from Coinbase Chief Legal Officer (CLO) Paul Grewal.

DATACARD
Understanding Tornado Cash

Tornado Cash is a decentralized finance (DeFi) protocol that allows users to create and manage private, permissionless wallets.

It uses zero-knowledge proofs (ZKPs) to enable transactions without revealing the sender or recipient's identities.

Launched in August 2021, Tornado Cash has gained popularity for its anonymity features, processing over $7 billion in transactions within the first year.

The protocol's use cases include mixing cryptocurrencies to enhance privacy and facilitating cross-chain transactions.

The Court Ruling and Its Implications

A final court ruling on the case remains unresolved, with users contesting the Treasury’s action of adding ‘Tornado Cash’ to the Specially Designated Nationals (SDN) list. In a strongly worded X post, Grewal argued that the Treasury is attempting to sidestep this final judgment, undermining legal procedures.

DATACARD
What is Coinbase?

Coinbase is a digital currency exchange platform that allows users to buy, sell, and store cryptocurrencies such as Bitcoin, 'such as' , Ethereum, and Litecoin.

Founded in 2012 by Brian Armstrong and Fred Ehrsam, Coinbase provides a secure and user-friendly interface for individuals and businesses to access the world of cryptocurrency.

With over 35 million registered users, Coinbase is one of the largest cryptocurrency exchanges globally.

Past Cases and Future Uncertainty

us_treasury,regulation,crypto_mixer,cryptocurrency,tornado_cash,sanctions

Grewal pointed out that in past cases where sanctions were lifted, yet the cases remained open, enabling the government to reimpose sanctions at will. He stressed that the Treasury has not provided any assurance that ‘Tornado Cash’ won’t be blacklisted again in the future.

DATACARD
Paul Grewal: A Leading Figure in Technology and Law

Paul Grewal is a renowned American lawyer and technologist.
He served as the Chief Operating Officer (COO) of Coinbase, a leading cryptocurrency exchange platform.
Prior to joining Coinbase, Grewal worked at Facebook, where he held various leadership positions, including serving as the company's Deputy General Counsel.
Grewal has also worked as an attorney at the US Department of Justice and clerked for a federal judge.
He is known for his expertise in technology law and policy.

Coinbase‘s Support for Tornado Cash

Coinbase and the Ethereum Foundation have been funding the legal defense of lead developer Alexey Pertsev. Other participants in the cryptocurrency market contend that the Treasury’s stance was too harsh and ungrounded. The removal of sanctions from ‘Tornado Cash’ marks a significant milestone in the ongoing potential regulation of crypto mixers.

A Call for Compliance with Court Orders

Grewal reproached the Treasury for not fully complying with the court order and for continuing to try and evade a legal resolution to the case. This criticism highlights the need for clarity and consistency in regulatory actions, particularly when it comes to matters of blockchain technology and cryptocurrency.

The uncertainty about the Treasury’s future actions, along with the legal ambiguity that still exists, might reimpose sanctions in the future, fueling the debate on the legal status of ‘Tornado Cash.’ As the regulatory landscape continues to evolve, it is essential for governments and regulatory bodies to strike a balance between enforcement and fairness.

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