Industry Advocacy Group’s Letter to U.S. Lawmakers

DeFi Education Fund has united 35 crypto firms to urge eight U.S. lawmakers to “correct” the DOJ’s interpretation of criminal law regarding unlicensed money transmitting businesses.

The signatories assert that the DOJ’s application of laws meant for money transmission businesses to software developers is misguided. They allude to the ongoing case against Tornado Cash developer Roman Storm, who faces charges of conspiracy for operating an unlicensed money-transmitting business.

The Need for a Clear Definition

The letter, directed to leaders of various U.S. legislative committees, highlights U.S. Code Title 18 Section 1960, concerning the prohibition of unlicensed money transmitting businesses as central to the dispute. The Treasury Department’s FinCEN defined unlicensed money transmission laws in 2019, fostering the view that applying Section 1960 to developers misconstrues FinCEN guidance, potentially jeopardizing blockchain developers in the U.S.

Conflicting interpretations of money transmission by government agencies create an ambiguous and inequitable landscape for law-abiding industry players.

Among the letter’s signers are organizations like Paradigm, A16z Crypto, Polygon Labs, Electric Coin Co., and Filecoin Foundation.

Previous criticisms of the DOJ’s stance date back to May when Senators Cynthia Lummis and Ron Wyden addressed their concerns to then-U.S. Attorney General Merrick Garland, asserting the DOJ’s view mistakenly prosecutes internet service providers and mail carriers.

Tornado Cash Update

Although FinCEN lifted sanctions on Tornado Cash in March 2023, Roman Storm’s legal troubles persist. He faces a maximum of 45 years in prison across multiple charges, including conspiracy to commit money laundering and sanctions violations.

Storm describes Tornado Cash as a “non-custodial privacy protocol” or mixer, which obfuscates the origins of users’ cryptocurrency. Notably, Tornado Cash allegedly facilitated over $1 billion in money laundering, including funds linked to North Korean hackers.