On August 8th, 2022, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) sanctioned Tornado Cash. The sanction was against the fund laundering worth 7 Billion USD. The platform was used by various hacking groups from different geographies. One such name in the books is Lazarus Group who laundered 45 Million USD via Tornado Cash.
Tom Emmer, An American attorney, has sent a letter to OFAC requesting an explanation regarding the unprecedented calls for the virtual currency mixer Tornado Cash. The sanction was unique and first of its kind. Tornado Cash was levied against a software and not a physical entity or an individual.
Is Tornado Cash Really Affecting National Security?
OFAC’s sanction on the virtual currency mixer, Tornado Cash, is levied against a software in accordance with Executive Order 13694. First time OFAC announced a sanction which is not against an entity or an individual ‘to be responsible for complicity in malicious acts of cyber crimes. The virtual currency mixer may pose a threat to the U.S. national security, foreign policy, or the financial stability in some way or other.
Moving on, Emmer questioned the Treasury that what technologies for the blockchain developers are sanctionable. He added, what law enforcements can be taken against such developers or technologies in the future.
The Treasury must also clarify on what technologies are under the SDN list. In Emmer’s letter he mentioned, “It would be helpful for congress and blockchain developers to understand the factors considered in OFAC’s designation of technology to the SDN list.”
The U.S. Treasury Becomes Clearly Questionable
With an ongoing lawsuit against Tornado Cash, Netherland authorities arrested a 29-year-old man who is seemingly the brain behind the virtual currency mixer. The defendant is extradited to the United States facing various allegations. The allegations include illicit cash-fund flows, fund laundering and most important of all mixing cryptocurrencies via decentralized mixing service.
Emmer also raised a query to the Under Secretary of the Treasury of Terrorism and Financial Intelligence. Emmer asked for a clear justification. The Under Secretary failed justifying that Tornado Cash failed to impose effective controls designed to stop money laundering for bad actors in the crypto industry.
Source: https://www.thecoinrepublic.com/2022/08/25/congressman-tom-emmer-questioned-the-treasury-against-sanction-of-tornado-cash/