Crypto firms have urged Congress to press the Department of Justice
A coalition of crypto firms has urged Congress to press the Department of Justice to amend an “unprecedented and overly expansive” interpretation of laws that were used to charge the developers of the crypto mixer Tornado Cash
The organization cautioned lawmakers that the DOJ’s current position may punish almost all blockchain software creators in a letter dated March 26. The letter was co-signed by prominent industry giants Coinbase and Kraken and was led by the DeFi Education Fund.
Important Senate and House committees, such as the House Financial Services Committee and the Senate Banking Committee, received the letter.
Industry Coalition Says DOJ’s Tornado Cash Case Endangers US Crypto Development
The consortium contends that the whole U.S. digital asset development ecosystem is at risk due to the DOJ’s legal approach, which was first presented in its August 2023 indictment of Tornado Cash inventors Roman Storm and Roman Semenov.
Storm, who is presently free on bail after entering a not guilty plea, is attempting to get the charges dropped. Russian national Semenov is still at large.
Similar accusations have been brought by the DOJ against the Samourai Wallet creators, who have entered a not guilty plea and are also accused of money laundering.
The DOJ’s definition of a “money transmitting business” lies at the heart of the coalition’s complaint. The letter cites two U.S. laws that define and make unauthorized money transmission illegal: Title 31 Section 5330 and Title 18 Section 1960.
Additionally, it cites 2019 Financial Crimes Enforcement Network (FinCEN) instructions that made it clear that software developers who do not have authority over user cash are not regarded as money transmitters.
The DOJ, however, seems to have disregarded these differences in favor of using its own interpretation to support its claims against non-custodial developers.
According to the alliance, the outcome is a legal ambiguity between FinCEN and the DOJ, placing developers in an unpredictable and possibly dangerous situation.
The letter cautioned that if the DOJ’s strategy is not changed, software developers who never handle client assets may be subject to criminal punishment. “This would seriously stifle American innovation and development.”
U.S. Treasury: Tornado Cash Removed off Sanctions List; No Final Decision Needed
In the ongoing case regarding the 2022 sanctions on cryptocurrency mixer Tornado Cash, the U.S. Treasury Department said earlier this week that no additional court action is required.
The site was first placed on a blacklist by the Treasury’s Office of Foreign Assets Control (OFAC), which claimed that North Korea’s Lazarus Group was using it to launder illegal funds. Six users then filed a lawsuit against the government, supported by Coinbase, alleging that the sanctions were illegal.
In a court filing on March 21, the Treasury declared that the issue was now moot and removed Tornado Cash and its associated smart contracts from the sanctions list.Paul Grewal, Coinbase’s chief legal officer, disagreed, claiming that the legal issue at the center of the case is not resolved by delisting the platform.
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