US lawmakers demand Treasury answer what it's doing about Tornado Cash

As a seasoned crypto investor with over two decades of experience navigating the ever-evolving digital asset landscape, I find myself both intrigued and concerned by the recent developments involving Tornado Cash. The cat-and-mouse game between regulators and decentralized finance (DeFi) platforms has become a familiar dance, yet the stakes seem to grow higher each time.

A number of Democratic representatives in the U.S. House of Representatives have been pressing for clarification from the Treasury Department concerning actions taken regarding Tornado Cash, a cryptocurrency mixing service that was sanctioned in 2022 yet continues to function.

As a researcher delving into the realm of cryptocurrencies, I am reaching out to seek further insights regarding the current utilization of the Tornado Cash mixing service, following the imposition of sanctions, as expressed in a joint letter penned by certain lawmakers, among whom is crypto-skeptic Brad Sherman, on November 14th.

Even with the imposed restrictions, Tornado Cash has managed to stay active and operates as a decentralized system of automated code, known as smart contracts,” they noted.

Lawmakers noted a significant surge in the use of mixers this year, as Tornado Cash received approximately $1.8 billion in deposits during the first half of 2024 – a 45% rise compared to the entirety of 2023, further emphasizing:

“This problem shows zero signs of going away anytime soon.”

As an analyst, I’ve been outlining instances where Tornado Cash has been linked to supplying tumbling services for malicious entities such as rogue nations, terror groups, and cybercriminals. Subsequently, I’ve posed questions to the Treasury Department, seeking clarification on the actions being taken in response to these troubling associations.

In August 2022, Tornado Cash faced sanctions due to its role in aiding the laundering of approximately $7 billion worth of cryptocurrencies, which included digital assets that had been stolen through hacking groups linked to North Korea.

The letter pointed out that, unlike sanctioned centralized mixers like Blender and Sinbad, Tornado Cash continues to operate due to its decentralized nature.

They wanted the agency to provide approximations regarding illegal transactions carried out via Tornado Cash, as well as information about the sanctions imposed and enforcement actions taken against users and platforms that utilized this service.

Additionally, they inquired about any reports on questionable activities and numerical data, and wanted to know if the Treasury was contemplating possible additional penalties against foreign individuals or platforms that may have dealt with blended funds.

A query has been made regarding the schedule for implementing new rules, specifically the timeframe for the Financial Crimes Enforcement Network (FinCEN) to complete and finalize a proposal that would mandate financial institutions to maintain transaction records related to cryptocurrency tumblers or mixers.

Lawmakers wanted to know if the Treasury had sufficient enforcement methods available and demanded a reply along with a staff briefing, due on December 2, 2024.

Additionally, there’s an ongoing dispute involving cryptocurrency privacy advocates who are questioning the legality of labeling decentralized services as “entities” subject to sanctions, in light of the Treasury Department’s actions.

Back in the early days of this month, a district judge postponed my upcoming trial on charges related to money laundering and sanctions violations, which I faced since 2023, to the year 2025, specifically in April. I, Roman Storm, am the co-founder of Tornado Cash.

2024-11-19 06:40

US lawmakers demand Treasury answer what it’s doing about Tornado Cash

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