The United States Treasury imposed sanctions on Ethereum coin mixer Tornado Cash earlier this month, effectively outlawing the device in the nation due to allegations that it facilitates money laundering. But because the move sparked such intense debate in the cryptocurrency community, a U.S. Congressman is now raising concerns about the Department of the Treasury’s conduct.
Congressman Tom Emmer of the United States sent a letter to Treasury Secretary Janet Yellen inquiring about recent limitations put on Tornado Cash, a service that mixes Ethereum coins.
“The sanctioning of neutral, open-source, decentralized technology presents a series of new questions.” He also said that it impacts national security as well as the privacy of every American citizen. a total of $7 billion has been transferred using Tornado Cas
When using Tornado Cash, currencies from various transactions involving numerous users are combined, and the right quantities are subsequently output to the allocated wallets. The movement of assets on the open Ethereum blockchain is hidden by it.
U.S. Representative Tom Emmer questioned Treasury Secretary Janet Yellen about the logic for the department’s approval of Tornado Cash, a smart contract-based business.
The Tornado Cash website and a number of Ethereum wallet addresses have been added to the Treasury’s Office of Foreign Assets Control’s (OFAC) Specially Designated Nationals list, making it illegal for Americans to use the service or interact with those addresses.
Since its establishment in 2019, Tornado Cash, according to OFAC, has been used to “launder more than $7 billion worth of virtual currency.” According to crypto analytics company Elliptic, the majority of the transactions were done for legal purposes and only $1.5 billion was related to illegal activity or money laundering.
However, after the Harmony Bridge hack in June, the North Korean state-sponsored hacking group Lazarus used Tornado Cash to launder more than $96 million in cryptocurrency. This was specifically condemned by OFAC.
Emmer’s letter makes many direct inquiries to the Treasury Department and OFAC, reiterating some of the worries raised throughout the cryptocurrency community. In his letter, the Minnesota Republican stated that while he “shares OFAC’s concerns” regarding the unauthorised use of Tornado Cash, “technology is neutral, and the expectation of privacy is normal.”
He also cites the FinCEN precedent from 2019 as an evidence that anonymizing software is not “subject to Bank Secrecy Act obligations.” FinCEN is a division of the Treasury Department. Despite the fact that he states, “OFAC is not bound by FinCEN regulations,” there is a Treasury Department definition of coin mixers that contradicts the sanctions.