Lawmakers press Treasury over Tornado Cash sanctions

A group of U.S. Democrat House members is pressing the Treasury for updates on actions taken against Tornado Cash (CRYPTO:TORN), a cryptocurrency mixing service sanctioned in 2022 but still operational.

In a November 14 letter led by Congressman Brad Sherman, the lawmakers expressed their concerns over Tornado Cash's continued functionality despite the sanctions imposed on it.

The letter emphasised that Tornado Cash, unlike centralised services such as Blender and Sinbad, operates through decentralised smart contracts, which allow it to remain active.

They noted a 45% increase in mixer usage, with Tornado Cash reportedly receiving $1.8 billion in deposits during the first half of 2024, signaling a persistent issue.

“This problem shows zero signs of going away anytime soon,” the lawmakers wrote.

The letter cited Tornado Cash’s alleged involvement in enabling illicit activities, including laundering over $7 billion in cryptocurrency linked to North Korean hacking groups.

The members called for detailed information on enforcement actions, including suspicious activity reports, statistics on illicit transactions following the sanctions, and potential secondary sanctions for non-U.S. entities that interact with mixed funds.

The lawmakers also asked about the Treasury's available enforcement tools and whether they are adequate to address the unique challenges posed by decentralised mixers.

They requested a response and a staff briefing by December 2, 2024, and sought an update on when the Financial Crimes Enforcement Network (FinCEN) might introduce new regulations for tracking crypto mixer transactions.

This legislative push comes as crypto privacy advocates continue to dispute the Treasury's authority to impose sanctions on decentralised services.

In related news, a legal case involving Roman Storm, co-founder of Tornado Cash, who faces charges of money laundering and sanctions violations, is set for trial in April 2025.

At the time of reporting, the Tornado Cash (TORN) price was $3.20.