Crypto Companies Encourage Congress to Contest DOJ’s Extensive Legal Action Against Tornado Cash Creators
A group of 34 cryptocurrency companies and advocacy organizations is calling on Congress to resist what they describe as an “unprecedented and excessively broad” legal interpretation utilized by the US Department of Justice (DOJ) in its action against the creators of the crypto mixer Tornado Cash.
In a letter dated March 26, the coalition—headed by the Decentralized finance Education Fund and supported by prominent industry figures including Coinbase and Kraken—alerted lawmakers that the DOJ’s present position could jeopardize nearly all distributed ledger software developers.
The correspondence was dispatched to significant committees in both chambers of Congress, including the Senate Banking Committee and House Financial Services Committee.
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DOJ’s Tornado Cash Case Poses Risks for US Crypto Advancement, Industry Coalition Warns
The coalition asserts that the DOJ’s legal approach, first revealed in its August 2023 indictment of Tornado Cash developers Roman Storm and Roman Semenov, threatens the entire digital asset development ecosystem across the United States.
Storm, who has entered a not guilty plea and is currently released on bail, is attempting to have the charges dropped. Semenov, a Russian citizen, is still at large.
The DOJ has levied comparable charges against the creators of Samourai Digital wallet, who are also facing money laundering allegations and have pleaded not guilty.
At the heart of the coalition’s concerns is the DOJ’s definition of what constitutes a “money transmitting business.” The letter refers to two U.S. legal statutes—Title 31 Section 5330 and Title 18 Section 1960—that outline and criminalize unlicensed money transmission.
It also highlights 2019 guidance from the Financial Crimes Enforcement Platform (FinCEN), which clarified that software developers who do not have control over user funds are not regarded as money transmitters.
NEW: Today, the Decentralized finance Education Fund is excited to release a coalition letter from industry leaders & advocates urging Congress to amend what we believe is the DOJ’s misguided interpretation of money transmission regulations.
A thread
— Decentralized finance Education Fund (@fund_defi) March 26, 2025
Nevertheless, the DOJ seems to have ignored these distinctions, employing its own interpretation to construct cases against non-custodial developers.
The outcome, the coalition argues, is a legal inconsistency between FinCEN and the DOJ, putting developers in an uncertain and potentially dangerous situation.
“If not addressed, the DOJ’s method could impose criminal liability on software developers who never manage customer funds,” the letter cautioned. “This would greatly hinder innovation and development in the U.S..”
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U.S. Treasury: No Ultimate Ruling Required After Tornado Cash Deleted from Sanctions List
Earlier this week, the U.S. Treasury Department indicated that no additional court proceedings are necessary regarding its ongoing lawsuit over its 2022 sanctions on crypto mixer Tornado Cash.
The Treasury’s Office of Foreign Assets Control (OFAC) initially designated the protocol, claiming it was utilized by North Korea’s Lazarus Group to launder illicit funds. In response, six users, supported by Coinbase, sued the department, arguing that the sanctions were unjust.
On March 21, the Treasury removed Tornado Cash and its associated smart contracts from the sanctions list, stating in a court document that the case is now moot.
However, Coinbase’s Chief Legal Officer, Paul Grewal, disagreed, asserting that the removal of the platform does not address the legal issues central to the lawsuit.
Power seldom relinquishes itself willingly. It gasps and struggles until it is completely spent. @USTreasury submitted yet another late Friday motion regarding Tornado Cash. Having reluctantly removed TC from sanctions, they now claim that there’s no need for a final court ruling. But that’s not the law,… pic.twitter.com/Je8KD51X0q
— paulgrewal.eth (@iampaulgrewal) March 23, 2025
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Key Takeaways
- A coalition of 34 crypto asset firms is calling on Congress to contest the DOJ’s interpretation of money transmission laws applied in the Tornado Cash case.
- The group contends that the DOJ’s perspective could criminalize non-custodial software developers and threaten blockchain advancement in the US.
- Despite the Treasury’s removal of Tornado Cash from the sanctions list, Coinbase maintains that the legal matters at the heart of the case are still unresolved.
The post Crypto Firms Urge Congress to Challenge DOJ’s Broad Legal Case Against Tornado Cash Developers appeared first on 99Bitcoins.
