{"id":10298,"date":"2025-03-27T08:55:36","date_gmt":"2025-03-27T07:55:36","guid":{"rendered":"https:\/\/wsj-crypto.com\/?p=10298"},"modified":"2025-03-27T08:55:36","modified_gmt":"2025-03-27T07:55:36","slug":"cryptocurrency-advocates-call-on-congress-to-revise-doj-regulations-targeting-tornado-cash-developers","status":"publish","type":"post","link":"https:\/\/wsj-crypto.com\/index.php\/2025\/03\/27\/cryptocurrency-advocates-call-on-congress-to-revise-doj-regulations-targeting-tornado-cash-developers\/","title":{"rendered":"Cryptocurrency Advocates Call on Congress to Revise DOJ Regulations Targeting Tornado Cash Developers"},"content":{"rendered":"

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A coalition of cryptocurrency companies has urged Congress to pressure the Department of Justice to revise an “unprecedented and excessively broad” interpretation of laws that were utilized to indict the creators of the crypto mixer Tornado Cash.<\/p>\n

A letter dated March 26 signed<\/a> by 34 cryptocurrency organizations and advocacy groups submitted to the Senate Banking Committee, House Financial Services Committee, and both judiciary committees stated that the DOJ\u2019s interpretation of unlicensed money-transmitting businesses implies that \u201calmost every blockchain developer could face criminal prosecution.\u201d<\/p>\n

The correspondence \u2014 spearheaded by the DeFi Education Fund and supported by major firms such as Kraken and Coinbase \u2014 emphasized that the Justice Department\u2019s viewpoint \u201cgenerates confusion and uncertainty\u201d and \u201cendangers the sustainability of U.S.-based software development in the digital asset sector.\u201d<\/p>\n

The coalition indicated that the DOJ revealed its stance \u201cin August 2023 through criminal charges\u201d \u2014\u00a0the same timeframe it implicated Tornado Cash<\/a> creators Roman Storm and Roman Semenov with money laundering activities.<\/p>\n

Storm has been released on bail, has entered a not guilty plea, and seeks to have the charges dismissed<\/a>. Semenov, a citizen of Russia, remains at large.<\/p>\n

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Source: <\/em>DeFi Education Fund<\/em><\/a><\/p>\n<\/figcaption><\/figure>\n

The DOJ has brought similar allegations<\/a> against Samourai Wallet co-founders Keonne Rodriguez and William Lonergan Hill, both of whom have pleaded not guilty.<\/p>\n

The crypto coalition\u2019s letter asserted that two specific sections of the US Code outline a \u201cmoney transmitting business\u201d \u2014 Title 31 section 5330, which delineates who is required to be licensed, and Title 18 section 1960, which criminalizes the operation of unlicensed entities.<\/p>\n

It mentioned that guidance provided in 2019 by the Treasury\u2019s Financial Crimes Enforcement Network (FinCEN) offered illustrations of what constitutes money-transmitting activities and indicated that \u201cif a software developer never assumes possession or control over customer funds, that developer is not engaged in a \u2018money transmitting business.\u2019\u201d<\/p>\n

The letter contended that the DOJ had adopted a stance that the definition of a money transmitting business under section 5330 \u201cis not pertinent to assessing whether someone is conducting an unlicensed \u2018money transmitting business\u2019 under Section 1960,\u201d despite the \u201cdeliberate similarity\u201d in both sections and FinCEN\u2019s guidelines.<\/p>\n

Related: <\/strong><\/em>Hester Peirce advocates for SEC rulemaking to incorporate crypto regulation<\/strong><\/em><\/a>\u00a0<\/p>\n

The coalition accused the DOJ of disregarding both FinCEN\u2019s guidelines and certain sections of the law to pursue its interpretation of a money-transmitting business in the case against Storm and Semenov.<\/p>\n

They claimed that this resulted in \u201ctwo distinct US government agencies holding conflicting interpretations of \u2018money transmission\u2019 \u2014 presenting an unclear and unfair scenario for law-abiding industry stakeholders and innovators.\u201d<\/p>\n

The letter warned that if unaddressed, the Justice Department\u2019s interpretation would place non-custodial software developers \u201cwithin the scope of U.S. criminal liability.\u201d<\/p>\n

\u201cThe ensuing, and entirely reasonable, anxiety among developers could effectively halt the advancement of these technologies within the United States.\u201d<\/p>\n

In January, Michael Lewellen, a member of the cryptocurrency advocacy organization Coin Center, sued Attorney General Merrick Garland<\/a> seeking to have his planned launch of non-custodial software deemed legal and to prevent the DOJ from applying money transmitting laws to prosecute him.<\/p>\n

Lewellen stated that the DOJ \u201chas initiated criminal prosecution against individuals for publishing analogous cryptocurrency software,\u201d which he argues extends the interpretation of money-transmitting laws \u201cbeyond what the Constitution permits.\u201d<\/p>\n

Magazine: <\/strong><\/em>Introducing lawyer Max Burwick \u2014 \u2018The ambulance chaser of crypto\u2019<\/strong><\/em><\/a>\u00a0\u00a0<\/p>\n