- US Treasury filed a “moot” notice after dropping sanctions against Tornado Cash, potentially preventing a final judgment in the Texas district court case.
- If the case is dismissed without judgment, no binding court order would prevent the Treasury from reimposing sanctions on similar software in the future.
- An appeals court previously ruled that Tornado Cash sanctions were unlawful, stating they exceeded powers granted by the International Emergency Economic Powers Act.
The US Treasury Department has moved to prevent a final court judgment in its Tornado Cash sanctions case by filing a “moot” notice just days after lifting restrictions against the cryptocurrency mixing service. The notice, submitted last Friday to a Texas district court, argues that since sanctions have been removed, the ongoing legal challenge no longer has practical relevance.
The Treasury’s notice effectively seeks to close the case without a declaratory judgment, which legal observers say could create a significant precedent gap. According to The Rage, this strategy could allow the Treasury to avoid a binding court order that would restrict similar sanctions on cryptocurrency privacy tools in the future.
The case originated when plaintiffs challenged the Treasury’s authority to sanction Tornado Cash, a decentralized protocol designed to enhance transaction privacy. They contended the department had overstepped its powers when applying sanctions to address money laundering concerns.
While plaintiffs initially lost their case in district court, they secured a significant victory at the appellate level. In November, an appeals court ruled that sanctioning Tornado Cash exceeded authorities granted under the International Emergency Economic Powers Act. This ruling represented a major setback for government attempts to regulate cryptocurrency privacy tools.
In January, the appeals court returned the case to the Texas district court with instructions to grant partial summary judgment favoring the plaintiffs. However, with sanctions now lifted, the Treasury’s “moot” filing may prevent this judgment from ever happening, potentially leaving uncertainty about similar regulatory actions in the future.
The timing of the Treasury’s notice—directly following sanction removal but before a final court judgment—suggests strategic maneuvering to limit judicial precedent that could constrain future crypto enforcement actions.
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