Treasury Urged to Investigate Crypto Mixers Like Tornado Cash

US lawmakers have urged the Treasury Department to ramp up its efforts in investigating illicit financial activities facilitated through Tornado Cash.

Rep. Sean Casten of Illinois wrote a letter to the Treasury last week, joined by five other Democratic representatives. 

A Strong Push to Prosecute Tornado Cash

The letter publicly disclosed earlier today, highlights the case of Tornado Cash co-founder Roman Storm. The prosecutors are accusing Storm of using illicit funds to acquire assets including properties worth $3.1 million and a Tesla SUV. 

In the letter, the Democrat representatives scrutinized Storm, claiming that he acknowledged the platform’s lack of security measures and how it was easily evadable in the absence of regulatory measures. 

“Even though it got slapped with sanctions in 2022, it’s still doing its thing—operating as decentralized smart contracts. The crew wants answers on how much Tornado’s been moving since the sanctions and if it’s just making things worse,” wrote Mario Nawfal in a post on X (formerly Twitter).

Furthermore, the letter also referenced Tornado Cash’s significant role in major incidents like the Ronin Network hack. 

“The Tornado Cash co-founders announced a screen to prohibit deposits directly from the OFAC-designated address; however, as Mr. Storm acknowledged in an encrypted message, the screen was “easy to evade” in the absence of any effective AML or KYC procedures,” Sean Casten wrote in the letter to the Department of Treasury. 

Back in August 2022, the Treasury’s Office of Foreign Assets Control (OFAC) designated Tornado Cash as a sanctioned entity. This prohibited US individuals and businesses from engaging with it. 

However, the decision sparked debate within the crypto community. Over the years, critics have argued that Tornado Cash, as software, cannot be sanctioned like a person or entity. 

Legal Battle Continues to Unfold

Legal battles surrounding Tornado Cash continue. Developer Alexi Pertsev received a five-year sentence from a Dutch court in May. He was convicted of laundering $2.2 billion through the mixer. Pertsev is now raising $750,000 to $1 million for his legal defense. 

Meanwhile, Roman Storm, whose trial was delayed from December to April, has also turned to crowdfunding for legal support. On social media, Storm has requested donations to cover mounting legal costs, which his defense team estimates at $500,000 per month. 

Privacy advocate Edward Snowden echoed support for Storm in January, stating, “Privacy is not a crime.”

Despite its sanction, Tornado Cash remains linked to recent high-profile cybercrimes. In September, hackers laundered $50 million in stolen cryptocurrency through the mixer. The funds were tied to breaches involving crypto projects such as Penpie and the Indian exchange WazirX. 

Additionally, earlier this year, hackers responsible for thefts at Poloniex and Kronos Research funneled over $7.3 million through Tornado Cash. These developments underscore the ongoing scrutiny of crypto mixers as global authorities seek to clamp down on their use in laundering illicit funds.