Rep. Emmer demands an explanation of OFAC’s Tornado Cash sanction from Sec. Yellen

Published at: Aug. 23, 2022

United States Congressman Tom Emmer sent a four-page letter to Treasury Secretary Janet Yellen on Tuesday regarding the Treasury Department’s sanctioning of cryptocurrency mixer Tornado Cash on Aug. 8. In his letter, Emmer posed a series of questions that seek to clarify the position of the Treasury Department’s Office of Foreign Assets Control (OFAC).

Emmer said that OFAC, acting under Executive Order 13694 to place Tornado Cash on its Specially Designated Nationals and Blocked Persons List (SDN), has for the first time extended the EO’s definition of person or individual to include code. He pointed to the distinction made by Treasury’s Financial Crimes Enforcement Network (FinCEN) between anonymizing services and anonymizing software to illustrate the issue he saw in OFAC’s action, while acknowledging that OFAC is not subject to FinCEN regulations.

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 (@RepTomEmmer) August 23, 2022

Emmer’s questions were of a practical nature. Noting that “Tornado Cash is a collection of several Ethereum smart contract addresses that are not controlled by a person (individual or entity),” Emmer asked what persons could be associated with those addresses and:

“Given that the Tornado Cash back-end will operate unchanged […] as long as the Ethereum network continues to operate, who or what entity did OFAC believe was reasonably responsible for imposing controls on the Tornado Cash blockchain contracts?”

Emmer went on to ask about the status of funds belonging to law-abiding Tornado Cash users and how they can reclaim those funds and how smart contracts “with no agency, corporate or personal,” can appeal the OFAC decision.

Related: Tornado Cash saga highlights legal issues affecting the crypto market

Emmer, a member of the House of Representatives Financial Services Committee and cochair of the Congressional Blockchain Caucus, is a highly visible presence in crypto legislation. He has in recent months criticized Securities and Exchange Commission (SEC) policy toward crypto companies, supported crypto miners before the Environmental Protection Agency (EPA) and cosponsored the new version of the Digital Commodity Exchange Act (DCEA). He is far from alone in his dismay over the OFAC action. Coin Center has expressed the intention of challenging OFAC in court.

Tags
Regulation
Sanctions
Related Posts
US Treasury Dept sanctions crypto OTC broker Suex for alleged role in facilitating transactions for ransomware attacks
The United States Department of the Treasury has announced it will impose sanctions on the Czech Republic and Russia-based business Suex OTC for allegedly allowing hackers to access cryptocurrency sent as payment for ransomware attacks. In an advisory update issued on Tuesday, the Treasury Department Office of Foreign Assets Control, or OFAC, added Suex OTC to its list of Specially Designated Nationals for which “assets are blocked and U.S. persons are generally prohibited from dealing with them.” The government agency listed Suex OTC’s offices in Moscow and Prague, as well as its website and 25 crypto addresses for Ether (ETH), …
Regulation / Sept. 21, 2021
US intelligence is looking at Chinese CBDC as a national security threat
The United States national security apparatus is warning other agencies about China’s upcoming digital currency. On Wednesday, news outlet the Washington Examiner reported on a letter that National Intelligence Director John Ratcliffe had sent Securities and Exchange Commission Chairman Jay Clayton earlier in the month. According to the report, Ratcliffe offered to have staff brief Clayton on the security issues that derive from China’s dominance in crypto mining as well as the country’s progress in digitizing the yuan. Ratcliffe’s letter also apparently pushed Clayton to ensure that U.S. crypto firms remain competitive. Cointelegraph has reported extensively on the race for …
Regulation / Nov. 25, 2020
Clinton: Regulate crypto to stop manipulation by Russia and China
Former Secretary of State HIllary Clinton has said that cryptocurrency markets need stronger regulations to protect against technological manipulation by Russia, China, and others. Her comments on cryptocurrency were part of a larger segment in a Nov. 24 interview with MSNBC TV news host Rachel Maddow on the manipulation of social media platforms by certain nations. Clinton’s warning extended to “technology of all kinds” which she said states and non-state entities could use to destabilize countries and the dollar as the reserve currency of the world. She said, “There’s one other thing that’s on the horizon which people are only …
Regulation / Nov. 25, 2021
Russian PM takes cue from Iran’s crypto payment permit for imports
Russia could soon be taking a cue from Iran by using cryptocurrencies for imports, according to comments from the Russian prime Minister. The adoption of digital assets is necessary as a “safe alternative” for cross-border payments, Russian Prime Minister Mikhail Mishustin declared at a strategic session on the development of the domestic financial system on Tuesday. The prime minister added that digital assets provide a good opportunity to ensure uninterrupted payments for imports and exports. Mishustin also pointed out the importance of ensuring tech infrastructure independence and cybersecurity of financial institutions, stating: “We need to intensively develop innovative areas, including …
Adoption / Aug. 30, 2022
Russian users are welcomed by crypto exchanges in Kazakhstan, but there’s a catch
Some cryptocurrency exchanges continue onboarding Russian nationals despite the latest Western sanctions against Russia, but not without certain restrictions. In late September, Kazakhstan’s President Kassym-Jomart Tokayev witnessed the nation’s first regulated fiat-to-crypto purchase by a local commercial bank, the Eurasian Bank. The transaction involved a local crypto exchange called Intebix, which allows retail clients to buy crypto with the local currency, the Kazakhstani tenge (KZT). Intebix is not limited to Kazakhstani nationals, and the crypto exchange is willing to service foreigners coming to the country, according to Intebix co-founder and CEO Talgat Dosanov. He emphasized that Intebix’s crypto transactions are …
Bitcoin / Oct. 20, 2022