Rep. Emmer demands an explanation of OFAC’s Tornado Cash sanction from Sec. Yellen

The Minnesota Republican highlighted the practical issues that could allegedly arise from the placement of smart contract addresses on the SDN list in a series of pointed questions.

United States Congressman Tom Emmer sent a four-page letter to Treasury Secretary Janet Yellen on Tuesday regarding the Treasury Department’s sanctioning of cryptocurrency mixer Tornado Cash on Aug. 8. In his letter, Emmer posed a series of questions that seek to clarify the position of the Treasury Department’s Office of Foreign Assets Control (OFAC).

Emmer said that OFAC, acting under Executive Order 13694 to place Tornado Cash on its Specially Designated Nationals and Blocked Persons List (SDN), has for the first time extended the EO’s definition of person or individual to include code. He pointed to the distinction made by Treasury’s Financial Crimes Enforcement Network (FinCEN) between anonymizing services and anonymizing software to illustrate the issue he saw in OFAC’s action, while acknowledging that OFAC is not subject to FinCEN regulations.

I sent a letter to Treasury Secretary Yellen regarding the unprecedented sanctioning of Tornado Cash. The growing adoption of decentralized technology will certainly raise new challenges for OFAC. Nonetheless, technology is neutral and the expectation of privacy is normal.⬇️ pic.twitter.com/0aN4a4A6tb

— Tom Emmer (@RepTomEmmer) August 23, 2022

Emmer’s questions were of a practical nature. Noting that “Tornado Cash is a collection of several Ethereum smart contract addresses that are not controlled by a person (individual or entity),” Emmer asked what persons could be associated with those addresses and:

“Given that the Tornado Cash back-end will operate unchanged […] as long as the Ethereum network continues to operate, who or what entity did OFAC believe was reasonably responsible for imposing controls on the Tornado Cash blockchain contracts?”

Emmer went on to ask about the status of funds belonging to law-abiding Tornado Cash users and how they can reclaim those funds and how smart contracts “with no agency, corporate or personal,” can appeal the OFAC decision.

Emmer, a member of the House of Representatives Financial Services Committee and cochair of the Congressional Blockchain Caucus, is a highly visible presence in crypto legislation. He has in recent months criticized Securities and Exchange Commission (SEC) policy toward crypto companies, supported crypto miners before the Environmental Protection Agency (EPA) and cosponsored the new version of the Digital Commodity Exchange Act (DCEA). He is far from alone in his dismay over the OFAC action. Coin Center has expressed the intention of challenging OFAC in court.