United States Senators Cynthia Lummis and Ron Wyden have sent a letter to Attorney General Merrick Garland voicing their concern over the Justice Department’s (DOJ’) interpretation of money transmission licensing.
As the bipartisan authors indicate in a footnote, this interpretation is being applied in the case against Roman Storm, co-founder of crypto mixer Tornado Cash, who has been charged with operating an unlicensed money transmission operation and other serious crimes.
The Bank Secrecy Act and the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) clearly define money transmission as the acceptance and transmission of currency and other forms of value. Non-custodial crypto service providers do not meet the established definition of money transmitters, and the DOJ is thus acting contrary to the Treasury, muddying policy enforcement, the senators said. In their words:
“Bitcoins have a clear unilateral owner at all times. At no point in the [transfer] transaction process is there uncertainty over where ownership resides. […] Custody and control are, therefore, the logical touchstone of where ‘acceptance and transmission’ occurs on Bitcoin and other crypto networks.”
FinCen is the “primary interpretive authority” of money transmission registration requirements. The standard suggested by the DOJ could be applied to a broad range of services, from internet service providers that process bank transfers to the post office, the senators wrote.
Crypto advocacy groups filed a joint amicus brief in April with the Southern New York District Court making a similar argument.
Lawyers for Storm filed a motion to dismiss the charges against him in March, saying Tornado Cash did not meet the definition of a money transmission business and Storm was unable to prevent sanctioned groups from using the service because it was “immutable.”
Related: DOJ’s Tornado Cash arguments show ‘obvious disdain for privacy’ — Lawyer
Prosecutors countered that Storm was accountable for operating the service and claimed he designed software to aid criminality. They said Tornado Cash was “involved the transportation and transmission of funds known to the defendant to have been derived from a criminal offense.”
Storm was arrested in August on charges of sanctions violations and facilitating money laundering in addition to unlicensed money transmission. He could be punished by up to 45 years in prison. He has pleaded not guilty to the charges and is free on $2 million bail with travel restrictions.
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