Democratic members of the U.S. Congress have called on the Treasury Department to explain the current situation surrounding Tornado Cash, a cryptocurrency mixing service sanctioned in 2022 but still operational.
Request for Information on Continued Operations
In a letter dated November 14, lawmakers, including prominent crypto critic Brad Sherman, expressed concerns about Tornado Cash's continued functionality.
“We are writing to request additional information on the ongoing operation of the Tornado Cash cryptocurrency mixing service despite the sanctions imposed,” the lawmakers stated. They highlighted that Tornado Cash remains functional due to its decentralized nature, distinguishing it from centralized mixers like Blender and Sinbad, which were also sanctioned.
Increased Usage of Tornado Cash
Lawmakers noted a significant rise in the use of crypto mixers this year. Tornado Cash processed deposits worth $1.8 billion in the first half of 2024, a 45% increase compared to the entire year of 2023. This trend, they stated, shows no signs of slowing down.
Allegations of Illegal Activities
The letter cited instances of Tornado Cash being used for illicit activities, including money laundering for cybercriminals, terrorist organizations, and sanctioned states. Tornado Cash was sanctioned in 2022 for allegedly facilitating the laundering of over $7 billion in cryptocurrency, including funds stolen by North Korean hacker groups.
Request for Detailed Information
Lawmakers asked the Treasury Department to provide the following:
Estimates of illegal activities conducted through Tornado Cash since sanctions were imposed.
Details on enforcement actions against users and exchanges that utilized the service.
Reports on suspicious activities and statistical data.
Potential secondary sanctions against non-U.S. individuals or entities interacting with Tornado Cash’s mixed funds.
Call for New Regulations and Enforcement Tools
The lawmakers also inquired about progress on regulations for cryptocurrency mixers, particularly FinCEN's efforts to implement rules requiring financial institutions to maintain records of transactions involving mixers. They questioned whether the Treasury Department has sufficient tools to enforce these rules effectively and requested a response and staff briefing by December 2.
Legal Challenges and Ongoing Litigation
Tornado Cash faces not only political scrutiny but also legal battles. Advocates of crypto privacy have challenged the sanctions, arguing that a decentralized service should not be classified as an “entity” for the purpose of sanctions.
Roman Storm, a co-founder of Tornado Cash, is also facing legal challenges. His trial for money laundering and sanctions violations was recently postponed to April 2025. Storm was arrested in 2023 and accused of aiding the operation of the service.
The Future of Tornado Cash
Despite sanctions and legal obstacles, Tornado Cash remains active, thanks to its decentralized framework. Lawmakers are now pressing the Treasury Department to develop more effective measures to combat illicit activities associated with the platform.
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