U.S. lawmakers pressed the Treasury Department to do their part to look into illicit finance through crypto mixing services, particularly Tornado Cash.
Democrats Rep. Sean Casten of Illinois led the letter sent to Treasury last week alongside Reps. Stephen Lynch, Brad Sherman, Bill Foster, David Scott, Emanuel Cleaver and Joyce Beatty. Casten, Sherman, Foster and Cleaver in particular have been critical of crypto and its use by bad actors.
The Treasury's Office of Foreign Assets Control, or OFAC, designated Tornado Cash as a sanctioned entity in August 2022, barring people in the U.S. and firms looking to operate in the U.S. from financial interactions with it. Critics in the crypto industry argued that Tornado Cash is not a person, but a software, and criticized Treasury's move and argued it didn't have the authority to sanction the mixer.
The lawmakers pushed back and said crypto mixers "present serious national security risks."
"Despite sanctions, Tornado Cash has remained online and continues to function as decentralized smart contracts," the lawmakers said in the letter last week.
They requested the Treasury to address questions about crypto mixers by Dec. 2, including an estimate of Tornado Cash activity since August 2022, whether sanctions have led to an increase in suspicious activity reports and if additional sanctions are under consideration.
"Will the Treasury Department consider imposing secondary sanctions on non-U.S. persons and cryptocurrency exchanges based outside of the U.S. for interacting with mixed funds from Tornado Cash?," the lawmakers asked in the letter.
Earlier this year, Reps. Casten, Foster, Cleaver and Sherman introduced a bill to temporarily block financial institutions for two years from conducting transactions with funds that have gone through crypto mixers while Treasury, the Securities and Exchange Commission and others "conduct a study on their illicit uses."
The Treasury Department did not respond to a request for comment.
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