Treasury department has been at the center of a controversy surrounding the blacklisting of coin mixer tornado cash. last august, the department of the treasury’s office of foreign assets control (ofac) issued a ban on u.s. citizens using the popular app, which allows people to anonymously send and receive ethereum. congressman tom emmer (mn-06) wrote a letter to the department of the treasury five months ago, asking a number of questions about the ban. coinbase, the biggest digital asset exchange in the u.s., is also funding a lawsuit against the treasury department for the move.
Controversy began in august of last year when the feds decided to ban tornado cash. this sent many in the crypto community up in arms, as the treasury department claimed criminals were using it to launder dirty funds. blockchain data company elliptic later claimed that only $1.5 billion of $7.6 billion that passed through the app was from illegal activity. the treasury department did since clarify, however, that it would not seek to punish people who were “dusted” with cryptocurrency linked to tornado cash.
Feds first said that over $7 billion-worth of dirty digital cash passed through tornado since its creation in 2019. congressman emmer had initially asked treasury secretary janet yellen to explain why the department had sanctioned a decentralized app—rather than a centralized entity operated by people—and pointed out that anonymizing software isn’t “subject to bank secrecy act obligations.” he also called the treasury’s move to ban the app a “destructive policy decision” and pointed out that it wasn’t practical to sanction people who received ethereum unwillingly from someone else using the app. assistant secretary for legislative affairs at the treasury jonathan davidson said in a monday letter to emmer that “because tornado cash remains the subject of active litigation, it would not be appropriate for treasury to comment further on the entity’s designation at this time.”