Tom Emmer. Photo: Tim Nelson | MPR News
US Congressman Tom Emmer sent a letter to Treasury Secretary Janet Yellen regarding the sanctions imposed on Tornado Cash. The politician called the measures “unprecedented” as they were aimed at a blockchain smart contract, not an individual or entity.
Prior to the US sanction of Tornado Cash, the government had never crossed that line. Technologies are considered neutral and software codes are protected under the first amendment of the US Constitution (freedom of speech). Therefore, the sanctions touched on sensitive points for many, even rulers.
In his letter to Secretary Yellen, Emmer alleges that the Treasury’s actions against Tornado Cash have raised “new issues, which affect not only our national security, but the right to privacy of every American citizen.” Emmer said he believes in the “constitutional right to privacy.”
Tornado Cash was sanctioned by Executive Order (EO) 13,694 which allows the Treasury’s Office of Foreign Assets Control (OFAC) to add individuals or entities to the List of Specially Designated Nationals and Blocked Persons (SDN). An entity, as Emmer said, is defined as:
“Partnership, association, trust, joint venture, corporation, group, subgroup, or other organization.”
In that sense, the inclusion of Tornado Cash on that list is, the government official explained, a “deviation from previous OFAC precedent.” OFAC has sanctioned Ethereum addresses, the smart contract and the Tornado Cash frontend and website. None of these fit the above definition. Emmer explained:
“(…) the addresses do not appear to be a person, entity or property (all properly subject to sanctions); they are, on the contrary, widely distributed technological tools and are not under the control of any entity or individual.”
The Treasury based its measures on the alleged fact that Tornado Cash “failed” to stop bad actors from using its platform. However, there was no person or entity, as the congressman argued, capable of preventing a given user from operating in the decentralized service. The code is created, self-sufficient, and continues “as long as the Ethereum network continues to operate”.
Why Tornado Cash Could Set a Dangerous Precedent Against Cyber Privacy
The Treasury through its Financial Crimes Enforcement Network (FinCEN) was explicit about the distinction between individuals or entities that provide “anonymization services”, such as exchanges, and persons or entities that write “anonymization software”. The latter are not “subject to the obligations of the Bank Secrecy Law”.
Emmer argues that the Treasury is going against its own definition, distinctions and classifications by imposing sanctions on a technology. Thus, the congressman asked the Treasury to clarify why it imposed sanctions on Tornado Cash when it is not an entity, as mentioned above.
Furthermore, Emmer wants the Treasury to be explicit about the reasons and factors that could cause a blockchain-based project and its developers to be added to the SDN list. Government officials also highlighted the importance of the appeals process associated with these procedures.
If a person or entity is sanctioned, they can provide more information or try to reverse the process, but Tornado Cash is unable to do so. This renders OFAC unable to maintain the “appeal process for the sanctioned address which has no ability to appeal the sanction to OFAC”.
At the time of writing, the US Treasury or its secretary has not yet responded to questions raised by the US congressman.
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