A group of United States Democratic lawmakers has called on the Treasury Department to explain why the sanctioned cryptocurrency mixing service Tornado Cash remains operational.
The crypto-mixing platform was blacklisted in August 2022 for allegedly aiding in laundering over $7 billion in illicit funds, including assets linked to North Korean hacking groups.
In a letter dated November 14, prominent crypto-critic Brad Sherman and other lawmakers expressed concern over Tornado Cash’s continued functionality.
“We write to request additional information about the ongoing use of the cryptocurrency mixing service Tornado Cash after sanctions were imposed,” they stated.
Tornado Cash Remains Accessible
The letter highlighted that Tornado Cash remains accessible via decentralized smart contracts, making enforcement challenging.
The lawmakers noted a significant uptick in mixer usage in 2024, with Tornado Cash processing $1.8 billion in deposits in the first half of the year alone—a 45% increase compared to the entirety of 2023.
“This problem shows zero signs of going away anytime soon,” they warned.
The correspondence outlined several examples of Tornado Cash being utilized by rogue states, terrorist organizations, and cybercriminals.
It also sought clarity on the Treasury’s actions to curb these activities.
Unlike centralized mixers such as Blender and Sinbad—which have ceased operations following sanctions—Tornado Cash’s decentralized nature enables it to persist, presenting unique enforcement difficulties.
The lawmakers posed several questions to the Treasury, including estimates of illicit activity involving Tornado Cash since the sanctions, details on enforcement actions against users and exchanges, and statistics on suspicious transactions.
Additionally, they inquired whether secondary sanctions against non-U.S. entities interacting with mixed funds were under consideration.
The letter also pressed for updates on regulatory measures, specifically asking about the Financial Crimes Enforcement Network’s (FinCEN) proposed rule requiring financial institutions to track transactions involving mixers.
The lawmakers urged the Treasury to provide a timeline for implementing these rules and to address whether current enforcement tools are sufficient.
The lawmakers requested a response and a staff briefing by December 2, 2024, underscoring the urgency of the matter.
Meanwhile, Tornado Cash faces ongoing legal scrutiny.
Privacy advocates are challenging the sanctions, arguing that decentralized platforms cannot be treated as entities under U.S. law.
Separately, co-founder Roman Storm awaits trial for money laundering and sanctions violations, now set for April 2025.
US Crypto Owners Expect More Regulation
Cryptocurrency enforcement in the United States may ease under the upcoming administration of Republican President-elect Donald Trump, with regulatory priorities expected to shift.
Speaking at a legal conference in New York, current and former senior government lawyers indicated that while financial fraud cases will still be pursued, the Justice Department’s focus will likely move toward immigration enforcement, a key campaign promise of Trump.
Scott Hartman, co-chief of the securities and commodities task force at the U.S. Attorney’s Office in Manhattan, revealed that fewer resources will be allocated to policing cryptocurrency crimes.
As of late, the SEC has been facing growing criticism due to its “regulation-by-enforcement” approach to the crypto industry.
Critics argue that the SEC has failed to establish a clear regulatory framework for cryptocurrencies, opting instead to pursue legal action against key industry players.
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