United States representative and cryptocurrency proponent Tom Emmer is asking the Department of the Treasury to explain the reason behind the recent sanctions against the Ethereum-based crypto mixer Tornado Cash.
Rep. Tom Emmer Queries Treasury’s Actions
Congressman Tom Emmer shared a letter via Twitter on Tuesday (August 23, 2022) addressed to Janet Yellen, Secretary of the Department of the Treasury, seeking clarity on the Treasury’s sanctioning of Tornado Cash.
In the letter, Emmer noted that the Treasury Department’s Office of Foreign Assets Control (OFAC) which added the crypto mixer to its Specially Designated Nationals list (SDN), said that the action was taken against a service that is neither an entity nor an individual. Tornado Cash is a service that obfuscates transaction details, thereby enabling privacy.
The Minnesota Republican also said that the blacklisted Ethereum wallet addresses were smart contract addresses that are not an individual, entity, or property, but are “widely distributed technology tools not controlled by any individual or entity.
Emmer further asked pointed questions to the Treasury Department seeking clarification for the agency’s decision. Part of the concerns raised by the Congressman was how innocent U.S. citizens who used Tornado Cash to anonymize legal transactions, will be able to reclaim their funds trapped in the smart contract.
Also, the U.S. representative asked if individuals who got unsolicited funds from blacklisted addresses were guilty of violating any law. According to Emmer:
“Are otherwise innocent U.S. persons who receive unsolicited funds from SDN-listed addresses in breach of law or regulation? What actionable steps should people in this situation take to comply with sanctions obligations while recognizing that on blockchain, individuals can receive funds unknowingly and unwillingly? Will OFAC release guidance to provide clarity for individuals in this situation?”
Shortly after the sanctions, an anonymous user sent fractions of ETH to several celebrities and cryptocurrency heavyweights, from a Tornado Cash wallet.
Meanwhile, an excerpt from Emmer’s letter said:
“The sanctioning of neutral, open-source, decentralized technology presents a series of new questions, which impact not only our national security but the right to privacy of every American citizen.”
Tornado Cash Sanction Generates Concerns Within Community
As previously reported by crypto.news, OFAC added Tornado Cash Ethereum addresses to its SDN list on August 9, making it the first time that the U.S. government will take such action against a smart contract. The agency claimed that the North Korean-backed hacking group Lazarus used Tornado Cash to launder ill-gotten funds.
Emmer, in his letter to Yellen, asked how the OFAC would uphold appeal processes for addresses on the SDN list that are neither controlled by a person nor corporate body.
In response to the OFAC sanction, stablecoin issuer Circle restricted the movement of USDC to the blacklisted addresses linked to Tornado Cash. Crypto derivatives platform dYdX also blocked accounts that have previously used the privacy tool.
Furthermore, an OpenSea user revealed that the NFT marketplace giant banned him from the platform. While OpenSea did not state the offense that resulted in the ban, the user suggested that the ban could have been a result of his interaction with Tornado Cash.
Notably, the Tornado Cash sanction has generated outrage and concern from the community. A Reddit user called the government’s action against the crypto mixer an attack while proffering solutions for the industry.
Ethereum co-founder Vitalik Buterin also said he used the sanctioned Tornado Cash to send funds to Ukraine after Russia’s invasion, an indication that the protocol is not only used for illicit activities.
The Tornado Cash saga deepened with the arrest of developer Alexey Pertsev in Amsterdam. Dutch claimed that the suspect allegedly concealed illicit activities and enabled money laundering. Crypto and blockchain proponents have protested Pertsev arrest.