(Kitco News) - As the saga around the Tornado Cash cryptocurrency mixer intensifies after the U.S. Treasury Department sanctioned the platform on August 8, U.S. Representative Tom Emmer is demanding answers from Treasury Secretary Janet Yellen regarding the agency’s actions.
The Republican from Minnesota penned a letter to Yellen on August 23 and posted it on Twitter, calling out the Treasury's Office of Foreign Assets Control, or OFAC, for blacklisting what is essentially a smart contract application.
"These sanctions are unique, however, in that they were not levied against a person or an entity, but against 'privacy-enabling' code," Emmer said in the letter. “The sanctioning of neutral, open-source, decentralized technology presents a series of new questions which impact not only our national security, but the right to privacy of every American citizen.”
The concerns raised by Emmer have largely echoed what many in the crypto community have been saying since the sanctions were first announced. Emmer has a high level of familiarity with crypto-related matters as he serves as co-chair of the Congressional Blockchain Caucus and has a long history as an advocate for the crypto industry.
The legislator noted that he “shares OFAC’s concerns” about the illicit use of Tornado Cash, but added, “Nonetheless, technology is neutral, and the expectation of privacy is normal.”
To further strengthen his position, Emmer cited precedent from the Treasury’s Financial Crimes Enforcement Network (FinCEN) from 2019 that suggests that anonymizing software isn’t “subject to Bank Secrecy Act obligations.”
Emmer noted that while the “OFAC is not bound by FinCEN regulations, [...] FinCEN as an arm of the Treasury Department developed definitions for the terms ‘mixer’ and ‘anonymizing’” that potentially conflict with the recent sanctions.
In an effort to gain further clarification on several matters, Emmer closed his letter by asking several pertinent questions of the Treasury Secretary, including what recourse U.S. persons have who receive unsolicited funds from Tornado Cash, which results in their wallet address being blacklisted.
“Are otherwise innocent U.S. persons who receive unsolicited funds from SDN-listed addresses in breach of law or regulation?” Emmer asked in his letter. “What actionable steps should people in this situation take to comply with sanctions obligations while recognizing that on blockchain, individuals can receive funds unknowingly and unwillingly?”
|
| Coinbase deals with a new lawsuit and celebrates the addition of PayPal to its TRUST network |
As it stands now, the Treasury’s Tornado Cash ban has generated far more questions from crypto users than answers provided, and it will likely take some time before greater clarity is offered.
Data provided by blockchain security firm SlowMist shows that Tornado Cash users deposited 955,277 ETH worth $2.44 billion to the platform in the first half of 2022 and withdrew 892,573 ETH ($2.24 billion) from the mixer.
According to Slowmist, the deposit and withdrawal activity relates to “typical money laundering incidents,” with Torando Cash receiving “74.7% of the funds laundered on the ETH blockchain.”
