US Senators ring alarms over the DOJ's treatment of crypto mixers and its interpretation of money transmitters

Sens. Cynthia Lummis, R-Wyo., and Ron Wyden, D-Ore., sharply criticized the U.S. Justice Department's enforcement approach to crypto amid their concerns that the department has expanded its breadth to crypto mixers over the past few months. 

In a letter sent to U.S. Attorney General Merrick Garland last week, bipartisan lawmakers Wyden and Lummis wrote expressing their "grave concerns" over the DOJ's expansion of the definition of money transmission as laid out by the Treasury Department's Financial Crimes Enforcement Network.

"I’m concerned the DOJ’s interpretation would treat software developers as criminals for merely writing and publishing code used by others – a dangerous precedent that contradicts decades of settled law and raises serious First Amendment concerns," Wyden said in a statement on Monday.

This comes after the DOJ accused two crypto mixers, Samourai Wallet and Tornado Cash, of operating unlicensed money-transmitting businesses. Wyden and Lummis cited the Bank Secrecy Act in their letter, arguing that a "money transmitting service" has to include "accepting currency, funds, or value," which is also reflected in FinCEN rules. Wyden and Lummis argued in their letter that FinCEN's definition of money transmissions doesn't loop in non-custodial crypto service providers.

"At no point when operating or providing non-custodial services do such service providers 'accept' crypto assets from their users," they said. 

Recent cases

Wyden and Lummis point to two recent examples of the Department's reach, including charges in April against the co-founders of crypto mixing service Samourai and a reply brief in their case against Tornado Cash. 

Last month, Samourai Wallet's two co-founders were charged with operating an unlicensed money-transmitting business. The DOJ said they were involved in over "$2 billion in unlawful transactions and facilitated more than $100 million in money laundering transactions from illegal dark web markets," including Silk Road.

The two senators also pointed to a reply brief from the DOJ against the developers of crypto mixing service Tornado Cash last month. Last year, prosecutors charged Tornado Cash co-founders Roman Storm and Roman Semenov with "conspiracy to commit money laundering, conspiracy to commit sanctions violations, and conspiracy to operate an unlicensed money transmitting business."

“The Biden administration steamrolling the existing and longstanding interpretation of FinCEN is not only wrong on the law, but undermines the entrepreneurial foundations that make America the global economic leader it is," Lummis said in a statement on Monday. “Wallet software is no more to blame for illicit finance than a highway is responsible for a bank robber's getaway car."

Crypto groups such as Coin Center have pushed against the DOJ's classification of non-custodial wallet developers as money transmitters, calling it an "unprecedented interpretation" of the law. 

The DOJ did not immediately respond to a request for comment.