Crypto Firms Urge Congress to Challenge DOJ’s Broad Legal Case Against Tornado Cash Developers

A coalition of 34 crypto firms and advocacy groups is urging Congress to push back against what they call an “unprecedented and overly expansive” legal interpretation used by the US Department of Justice (DOJ) in its case against the developers of crypto mixer Tornado Cash.

In a letter dated March 26, the group—led by the DeFi Education Fund and co-signed by major industry players including Coinbase and Kraken—warned lawmakers that the DOJ’s current stance could criminalize nearly all blockchain software developers.

The letter was sent to key committees in both the House and Senate, including the Senate Banking Committee and House Financial Services Committee.

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DOJ’s Tornado Cash Case Threatens US Crypto Development, Industry Coalition Warns

The coalition argues that the DOJ’s legal strategy, first introduced in its August 2023 indictment of Tornado Cash developers Roman Storm and Roman Semenov, poses a threat to the entire digital asset development ecosystem in the United States.

Storm, who has pleaded not guilty and is currently out on bail, is seeking to have the charges dismissed. Semenov, a Russian national, remains at large.

The DOJ has filed similar charges against the founders of Samourai Wallet, who also face money laundering allegations and have pleaded not guilty.

Central to the coalition’s complaint is the DOJ’s interpretation of what constitutes a “money transmitting business.” The letter points to two U.S. legal codes—Title 31 Section 5330 and Title 18 Section 1960—that define and criminalize unlicensed money transmission.

It also references 2019 guidance from the Financial Crimes Enforcement Network (FinCEN), which clarified that software developers who do not control user funds are not considered money transmitters.

NEW: Today, the DeFi Education Fund is proud to publish a coalition letter of industry leaders & advocates calling on Congress to correct, what in our collective view, is the DOJ’s dangerous misinterpretation of money transmission laws.

A thread https://t.co/ZbcifAzbj8 pic.twitter.com/AqhHDCjGc3

— DeFi Education Fund (@fund_defi) March 26, 2025

However, the DOJ appears to have dismissed these distinctions, applying its own interpretation to build cases against non-custodial developers.

The result, the coalition claims, is a legal contradiction between FinCEN and the DOJ, which puts developers in an uncertain and potentially perilous position.

“If left unaddressed, the DOJ’s approach could extend criminal liability to software developers who never handle customer funds,” the letter warned. “This would significantly chill innovation and development in the U.S.”

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U.S. Treasury: No Final Ruling Needed After Tornado Cash Removed from Sanctions List

Earlier this week, the U.S. Treasury Department stated that no further court action is needed in the ongoing lawsuit over its 2022 sanctions on crypto mixer Tornado Cash.

The Treasury’s Office of Foreign Assets Control (OFAC) initially blacklisted the platform, alleging it was used by North Korea’s Lazarus Group to launder illicit funds. In response, six users, backed by Coinbase, sued the department, claiming the sanctions were unlawful.

On March 21, the Treasury removed Tornado Cash and its related smart contracts from the sanctions list, asserting in a court filing that the case is now moot.

However, Coinbase’s Chief Legal Officer, Paul Grewal, disagreed, arguing that delisting the platform doesn’t resolve the legal question at the heart of the lawsuit.

Power does not recede voluntarily. It’s gasps and it gasps until it no longer can. @USTreasury filed yet another late Friday pleading against Tornado Cash. After grudgingly delisting TC, they now claim they’ve mooted any need for a final court judgment. But that’s not the law,… pic.twitter.com/Je8KD51X0q

— paulgrewal.eth (@iampaulgrewal) March 23, 2025

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