US lawmakers are urging the U.S. Treasury Department to focus more on crypto mixers, particularly Tornado Cash, which has been involved in laundering large sums of illicit funds. Tornado Cash, a decentralized platform, has faced legal issues after its co-founders were accused of facilitating billions in money laundering.
Rep. Sean Casten from Illinois, along with five other Democratic lawmakers, sent a letter to the Treasury Department last week calling for more investigation into the platform. The letter highlights the case of Roman Storm, one of the co-founders, who allegedly used illicit money to buy assets, including properties worth $3.1 million and a Tesla SUV.
In the letter, lawmakers criticized Storm's actions, pointing out that he admitted to the platform’s lack of 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 role in illegal activities. Lawmakers also pointed to incidents like the Ronin Network hack, which involved Tornado Cash.
Storm’s case is particularly concerning because it shows how easy it is for hackers to launder stolen money through Tornado Cash. After the platform was sanctioned by the U.S. Office of Foreign Assets Control (OFAC), which banned U.S. individuals and businesses from using it, the developers of Tornado Cash attempted to block deposits from sanctioned addresses. However, Storm admitted in an encrypted message that these measures were easy to bypass without proper Anti-Money Laundering (AML) or Know Your Customer (KYC) processes.
In 2022, OFAC added Tornado Cash to its list of sanctioned entities, but this decision sparked controversy, especially within the crypto community. Critics argued that it was unfair to sanction software like Tornado Cash, which is not a person or organization. Despite this, Tornado Cash remains a significant concern, as it continues to be used for illegal activities.
Legal proceedings against Tornado Cash and its developers are ongoing. In May, Dutch authorities sentenced developer Alexi Pertsev to five years in prison for laundering $2.2 billion using the platform. He is currently raising funds for his legal defense, with estimates for the cost of his case ranging from $750,000 to $1 million. Meanwhile, Roman Storm, whose trial was delayed from December to April, is also seeking crowdfunding to cover his legal costs, which could reach $500,000 per month.
Privacy advocate Edward Snowden showed his support for Storm, saying that “privacy is not a crime.” Despite the sanctions, Tornado Cash remains a popular tool for hackers. In September, criminals laundered $50 million through the platform, which was connected to breaches at crypto projects like Penpie and the Indian exchange WazirX. Additionally, hackers linked to thefts at Poloniex and Kronos Research laundered over $7.3 million through Tornado Cash earlier this year.
The continued misuse of Tornado Cash in high-profile cybercrimes has intensified calls for stricter regulation of crypto mixers. U.S. lawmakers are pushing for stronger measures to curb the platform’s use in illegal activities, but the debate over how to regulate decentralized technology like Tornado Cash is far from over. As the legal battles unfold, the future of Tornado Cash and its role in money laundering remains uncertain.