The Treasury Department is facing pushback from the cryptocurrency firms over sanctions imposed on a firm accused of helping to launder billions of dollars — with some funds going to North Korean hackers.
Earlier this month, the Treasury Department imposed sanctions on virtual currency mixing firm Tornado Cash, which has allegedly helped launder more than $7 billion in virtual currency since its inception in 2019.
Mixing services combine digital assets, including potentially illegally and legitimately obtained funds, to keep the origins of funds secret, including money stolen.
In the weeks after the sanctions were announced, crypto firms, lobbyists and at least one lawmaker came to the company’s defence, saying the sanctions open the door to limiting Americans’ use of privacy software.
Coin Center, a nonprofit cryptocurrency advocacy firm, says Treasury’s financial crimes enforcement arm “exceeded its legal authority” through its sanctions, which “potentially violate constitutional due process rights.” And the expression freedom”.
One cryptocurrency firm, Tether, said it would not freeze its Tornado Cash-linked accounts and intends to keep them open. And Rep. Tom Emmer (R-Minn.), who received at least $50,000 in contributions from the Blockchain Association’s chief executive this year, wrote Treasury Secretary Janet Yellen this week asking for the reasons for sanctioning Tornado. Cash, saying that the sanctions “impact not only our national security but also the right to privacy of all American citizens.”
The firm’s defence comes as Tornado Cash developer Alexey Pertsev was arrested by Dutch authorities in early August, days after US sanctions were imposed, for allegedly facilitating money laundering.
Treasury’s Office of Foreign Assets Control says Tornado Cash systems were used, among other things, to launder more than $96 million taken from the June Harmony blockchain bridge heist and cryptocurrency firm heist. August Nomad.
One cryptocurrency firm, Tether, has said it would not freeze its accounts tied to Tornado Cash and intends to keep them open. And Rep. Tom Emmer (R-Minn.), who has received at least $50,000 in contributions from the executive director of the Blockchain Association this year, wrote to Treasury Secretary Janet Yellen this week asking for the rationale for sanctioning Tornado Cash, saying the sanctions “impact not only our national security but the right to privacy of every American citizen.”