Lawmakers Urge Treasury to Investigate Tornado Cash for Money Laundering
US lawmakers are urging the U.S. Treasury Department to focus on crypto mixers, especially Tornado Cash, linked to laundering significant sums of illicit funds. Tornado Cash, a decentralized platform, has faced legal scrutiny after its co-founders were accused of facilitating billions in money laundering.
Rep. Sean Casten from Illinois and five other Democratic lawmakers sent a letter to the Treasury Department, requesting further investigation into Tornado Cash. The letter cites Roman Storm, a co-founder, who allegedly laundered money to acquire assets, including properties valued at $3.1 million and a Tesla SUV.
Lawmakers criticized Storm's actions, noting his admission regarding the platform’s inadequate security measures, which allowed users to bypass sanctions. Despite being sanctioned by the U.S. Treasury in 2022, Tornado Cash continues to operate, raising concerns about its involvement in illegal activities. The letter also references incidents like the Ronin Network hack, associated with Tornado Cash.
Storm’s case highlights vulnerabilities in the system, as it enables hackers to launder stolen funds easily. After being sanctioned by the U.S. Office of Foreign Assets Control (OFAC), which prohibited U.S. individuals and businesses from using it, Tornado Cash developers attempted to block deposits from sanctioned addresses. However, Storm revealed in an encrypted message that these efforts were easily circumvented without proper Anti-Money Laundering (AML) or Know Your Customer (KYC) protocols.
In 2022, OFAC sanctioned Tornado Cash, a decision that sparked controversy within the crypto community, with critics arguing against sanctioning software rather than individuals or organizations. Nonetheless, Tornado Cash remains a major concern due to its ongoing use for illegal activities.
Legal proceedings against Tornado Cash and its developers continue. In May, Dutch authorities sentenced developer Alexi Pertsev to five years in prison for laundering $2.2 billion via the platform. He is raising funds for his legal defense, estimated between $750,000 and $1 million. Roman Storm's trial has been postponed from December to April, and he is seeking crowdfunding for legal expenses potentially reaching $500,000 monthly.
Privacy advocate Edward Snowden expressed support for Storm, asserting that “privacy is not a crime.” Despite sanctions, Tornado Cash remains a favored tool among hackers. In September, criminals laundered $50 million through the platform, linked to breaches at projects like Penpie and the Indian exchange WazirX. Hackers associated with thefts at Poloniex and Kronos Research laundered over $7.3 million through Tornado Cash earlier this year.
The persistent misuse of Tornado Cash in high-profile cybercrimes has heightened calls for stricter regulation of crypto mixers. U.S. lawmakers advocate for stronger measures to limit the platform’s role in illegal activities, but the debate on regulating decentralized technologies like Tornado Cash continues. As legal challenges progress, the future of Tornado Cash and its implications for money laundering remains uncertain.