The sanctioning of open source crypto mixer Tornado.cash has generated much scrutiny and questions about the legality of a governmental entity punishing code.
On August 8th, the US Department of the Treasury’s Office of Foreign Assets Control (OFAC) announced sanctions against the crypto mixer, citing occurrences when the platform facilitated illicit activity such as money laundering. The crypto-sphere erupted, claiming sanctioning Tornado.cash is like sanctioning a highway because criminals drive cars.
Earlier today, Congressman Tom Emmer, a staunch supporter of Fintech innovation, tweeted that he sent a letter to Treasury Secretary Janet Yellen regarding the unprecedented sanctioning of Tornado Cash.
“The growing adoption of decentralized technology will certainly raise new challenges for OFAC. Nonetheless, technology is neutral and the expectation of privacy is normal.”
I sent a letter to Treasury Secretary Yellen regarding the unprecedented sanctioning of Tornado Cash. The growing adoption of decentralized technology will certainly raise new challenges for OFAC. Nonetheless, technology is neutral and the expectation of privacy is normal.⬇️ pic.twitter.com/0aN4a4A6tb
— Tom Emmer (@GOPMajorityWhip) August 23, 2022
In the letter, Congressman Emmer notes that Tornado.cash is privacy-enhancing software that functions as blockchain contracts, “once given the appropriate inputs, automatically execute…”
“…the smart contracts that are Tornado.cash are not maintained, updated, or controlled by any human being(s); rather the software is self sufficient.”
Emmer asks the question, given that the software is self-operating, who did OFAC believe was responsible for imposing controls on the blockchain contracts? He also asks about due process, noting that “sanctioned addresses have no ability to appeal.”
Congressman Emmer closes by acknowledging the need to guard against illicit activity while noting that decentralized technology raises new questions. Will Secretary Yellen respond? Probably not.
Some observers believe that regardless of the legality of sanctioning code, any legal challenge will be mired in the courts for some time to come, meaning that at least in the near term, Tornado.cash is no more.