US lawmakers demand Treasury answer what it’s doing about Tornado Cash

Several United States Democrat House members are demanding answers from Treasury officials on what is being done about the crypto-mixing service Tornado Cash, sanctioned in 2022 but remains operational.

“We write to request additional information about the ongoing use of the cryptocurrency mixing service Tornado Cash after sanctions were imposed,” stated the lawmakers, which included crypto-critic Brad Sherman, in a letter on Nov. 14. 

“Despite sanctions, Tornado Cash has remained online and continues to function as decentralized smart contracts,” they added.

The lawmakers pointed out that there has been a “resurgence” in mixer usage this year, with Tornado Cash accepting $1.8 billion in deposits in the first half of 2024, a 45% increase compared to all of 2023, adding: 

“This problem shows zero signs of going away anytime soon.”

The Congress members listed a raft of examples of Tornado Cash’s involvement in providing mixing services to rogue states, terrorist organizations, and cybercriminals before requesting more information from the Treasury on what is being done about it. 

Tornado Cash was sanctioned in August 2022 for helping launder over $7 billion in cryptocurrency, including assets stolen by hacking collectives associated with North Korea.

The letter pointed out that, unlike sanctioned centralized mixers like Blender and Sinbad, Tornado Cash continues to operate due to its decentralized nature.

They asked the agency for estimates of illicit activity through Tornado Cash since the sanctions and details of enforcement actions against users and exchanges that have used the service.

They also requested suspicious activity reports and statistics and asked whether the Treasury was considering potential secondary sanctions against non-US persons or exchanges that have interacted with mixed funds. 

Related: Tornado Cash verdict has chilling implications for crypto industry

There was a request for a timeline for new regulations, such as when the Financial Crimes Enforcement Network (FinCEN) is expected to finalize a Notice of Proposed Rulemaking requiring financial institutions to keep records of transactions involving crypto mixers. 

The lawmakers asked if the Treasury had adequate enforcement tools and requested a response and staff briefing by Dec. 2, 2024.

There is also a pending case where crypto privacy advocates are challenging the Treasury’s sanctions, arguing whether decentralized services can legally be considered an “entity” for sanctions purposes.

Earlier this month, a district Judge pushed Tornado Cash co-founder Roman Storm’s money laundering and sanctions violations trial to April 2025. Storm was arrested and charged in 2023. 

Magazine: Tornado Cash 2.0: The race to build safe and legal coin mixers