Crypto advocacy group Coin Center has criticized the most recent indictment of two former Tornado Cash builders, arguing that the details supplied do not show any clear violations of money-transmitting-related offenses.
Roman Storm and Roman Semenov have been indicted by the United States Office of Foreign Asset Control on Aug. 23 for conspiring to function an unlicensed money-transmitting business, amongst different fees.
In a follow-up opinion piece, Coin Center analysis director Peter Van Valkenburgh argues that the claims within the indictment seem to run counter to steering from the United States Financial Crimes Enforcement Network — arguing that Tornado Cash solely offers the software program to transmit cash reasonably than transmitting the cash itself.
New Tornado Cash indictments appear to run counter to FinCEN steering
Coin Center’s preliminary ideas on a case that would probably criminalize the publication of software program codehttps://t.co/YCBv3vsZAE
— Neeraj K Agrawal (@NeerajKA) August 23, 2023
“The solely factor the indictment claims relating to the defendants’ unlicensed cash transmission is that they ‘engaged within the enterprise of transferring funds on behalf of the general public’ and did so with out registering with FinCEN,” wrote Valkenburgh.
But does the indictment state any details that really show that the defendants engaged in any actions that qualify as cash transmission below the related regulation?
He pointed to an interpretation by FinCEN as to what constitutes “money transmission services” below the U.S. Bank Secrecy Act, which states:
“An anonymizing software provider is not a money transmitter.”
Valkenburgh then referred to one other excerpt stating that solely folks utilizing the software program might be thought of cash transmitters:
“[A] person that utilizes the software to anonymize the person’s own transactions will be either a user or a money transmitter, depending on the purpose of each transaction.”
While Valkenburgh mentioned that Tornado Cash made it simpler for people to use the protocol’s sensible contracts to transmit cash, he argued it doesn’t imply that the builders have been cash transmitters themselves.
“[But] that doesn’t somehow mean that they became transmitters merely because they provided tools that others used to transmit their own money,” Valkenburgh defined.
Valkenburgh additionally criticized claims within the indictment suggesting that Storm and Semenov had full management over the protocol’s sensible contracts.
“Ethereum smart contracts are variable and sometimes people have no control over their operation, some control, or total control. This is the key fact needed to determine whether one is performing money transmission,” he argued.
Related: Crypto lobbyists still fighting to axe ‘unlawful’ Tornado Cash sanctions
Coin Center first voiced its opposition towards the U.S. Treasury in October when it sued the company for its unprecedented and unlawful sanctioning of Tornado Cash.
The OFAC indictment claims Storm and Semenov ran an unlicensed money transmission service by partaking within the enterprise of transferring funds on behalf of the general public. The enforcement company claimed the builders ought to have registered with FinCEN.
Semenov was added to OFAC’s checklist of Specially Designated Nationals and Blocked Persons on Aug. 23, whereas Storm was arrested by the Federal Bureau of Investigation in Washington state on the identical day.
Alexey Pertsev, one other one of Tornado Cash’s founders, was imprisoned by Dutch authorities in Aug. 2022 earlier than being released in late April.
Valkenburgh believes the result of the Tornado Cash saga could have a profound affect on the authorized rights of United States residents to construct and publish software program sooner or later.
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