WASHINGTON — Rep. Tom Emmer, R-Minn., asked the Treasury Department to explain its sanction of Tornado Cash, questioning why the federal government has shifted to penalizing an open source, self-running protocol whereas in the past it has only sanctioned wallet addresses and centralized services.
Tornado Cash earlier this month received a
The move has started to draw scrutiny from crypto advocates and questions from the financial industry about whether the sanction could set a precedent that would expand Treasury's sanction powers.
"OFAC has a long, commendable history of utilizing financial sanctions to enhance the national security of the United States," Emmer wrote in his
Emmer said the sanctions appear to be a "divergence from previous OFAC precedent" because some of the addresses in the Treasury's action were linked to smart contracts and open-source software, instead of a specific person or entity. He said the Financial Crimes Enforcement Network, another Treasury unit, has already said that only service providers should be subject to the Bank Secrecy Act, so Tornado Cash should be seen as an anonymizing mixer.
The letter also questions how users of Tornado Cash who weren't involved in any wrongdoing could reclaim funds trapped in the Tornado Cash smart contract, and whether U.S. consumers who received unsolicited funds from the addresses listed by the Treasury are "in breach of law or regulation."
