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US Senators Question Justice Department’s Prosecution of Crypto Mixers
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Two US senators have sent a letter to the attorney general arguing that his Department of Justice is making the wrong legal choice while prosecuting cryptocurrency mixing services.
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The letter argues that services like Tornado Cash are not money transmitters, and says the Treasury Department’s previous opinions on transmitters support this.
A bipartisan pair of US senators are questioning Attorney General Merrick Garland about the “unprecedented interpretation” of the law that the Department of Justice (DOJ) is using to prosecute cryptocurrency software services as unlicensed money transmitting businesses.
The Sens. Ron Wyden (D-Ore.) and Cynthia Lummis (R-Wyo.) sent a letter to Garland questioning the approach against companies like Samourai Wallet and Tornado Cash, pointing out that the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) has previously said that non-custodial crypto services should not be treated as money transmitters.
“I am concerned that the Justice Department’s interpretation would treat software developers as criminals simply for writing and publishing code used by others – a dangerous precedent that contradicts decades of established law and raises serious First Amendment concerns,” he said Wyden in a statement Monday.
Samourai was the newest crypto privacy business prosecuted by federal prosecutors last month. The lawmakers’ letter, dated May 9, argues that “subjecting developers of non-custodial cryptocurrency software to potential criminal liability as unregistered money transmitters contravenes the established interpretation of this provision.”
The Justice Department also argued in a court filing that FinCEN’s guidelines regarding crypto mixers did not address the idea of ”control,” a position the senators’ letter disputed. In its statement last month, the Justice Department said anything that facilitates the transfer of funds would meet the legal definition of a “money transmitter,” likening the wallet to a USB cable that transfers data or a frying pan that transfers heat.
The lawmakers’ letter states that the rule actually requires the utility to take control of the funds to be treated as a transmitter.
To know more: The Samourai wallet allegations raise existential questions for privacy technology “Wallet software is no more responsible for illicit finance than a highway is responsible for a bank robber’s car getting away,” Lummis said in a statement.
Congress is grappling with digital assets legislation that would establish comprehensive U.S. rules for the sector, including protections from money laundering. While one of the significant accounts should get a vote by the House of Representatives as early as next week, the prospect of wide-ranging legislation becoming law this year is slim, leaving federal authorities to work under existing law in the meantime.