Home Technology Crypto Firms Say US Sanctions Limit Use of Privacy Software | Technology

Crypto Firms Say US Sanctions Limit Use of Privacy Software | Technology

Crypto Firms Say US Sanctions Limit Use of Privacy Software |  Technology

By FATIMA HUSSEIN – Associated Press

WASHINGTON (AP) — The Treasury Department is facing a setback in the cryptocurrency industry following sanctions on a firm accused of helping launder billions of dollars — with some funds going to hackers north of the US. Koreans.

Earlier this month, the The Treasury Department has imposed sanctions on the virtual currency mixing company, Tornado Cash, which is said to have helped launder over $7 billion worth of virtual currency since its inception in 2019.

Mixing services combine various digital assets, including potentially illegally and legitimately obtained funds, to keep the origins of funds secret, including money that has been stolen.

In the weeks since the sanctions were announced, crypto firms, lobbyists and at least one lawmaker have come to the company’s defense, saying the sanctions open the door to limiting the use of software. confidentiality by the Americans.

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Coin Center, a nonprofit cryptocurrency advocacy firm, says the Treasury’s financial crimes enforcement arm “exceeded its legal authority” with its sanctions, which “potentially violate constitutional rights to due process and to freedom of expression”.

A cryptocurrency company, Tether, said so would not freeze its Tornado Cash accounts and intends to keep them open. Be p. Tom Emmer (R-Minn.), who has received at least $50,000 in contributions from the Blockchain Association’s executive director this year, wrote to Treasury Secretary Janet Yellen this week asking for justification for the Tornado Cash sanction, saying the sanctions “impact not only our national security, but on the right to privacy of every American citizen.”

He told The Associated Press that the sanctions punish Americans who use the company’s software for legitimate purposes. “My government does not have to sanction my ability to use software that protects my anonymity, especially when I use it for legitimate purposes,” he said.

The defense of the firm presents itself as a Tornado Cash developer Alexey Pertsev was arrested by Dutch authorities in early August, days after the imposition of US sanctions, for allegedly facilitating money laundering.

The Treasury’s Office of Foreign Assets Control says Tornado Cash’s systems were used to, among other things, launder more than $96 million from the theft of the June Harmony blockchain bridge and the heist of crypto firm Nomad in August.

A Treasury spokesperson said the agency is focused on disrupting criminal behavior and will use its sanctions authorities to protect the US financial system from illicit activities such as cyber theft, money laundering and the financing of the proliferation of weapons.

Kristin Smith, executive director of the Blockchain Association, said the sanctions are impacting law-abiding users of crypto-mixing technology.

“If you get paid in cryptocurrency, transactions on most blockchains are transparent,” she said, adding that mixers are used by those who don’t want their transactions visible on a public ledger. .

“I think we need to have a conversation about privacy and holding law enforcement accountable without compromising people’s ability to conduct private transactions,” Smith said.

This is not the first series of sanctions against a digital asset mixing company.

In May, the United States announced sanctions against North Korean digital currency mixing company Blender.io, accused of helping Lazarus Group, the sanctioned North Korean cyber-hacking group, to carry out a theft of 600 million dollars worth of digital currencies in March.

Ever since the Tornado Cash sanctions, crypto experts have been speculating on whether the expected regulations will result in a ban on mixing services.

The Biden Administration issued an executive order on digital assets in March that calls, in part, for industry regulation.

“It may be the end,” Smith said, “but we won’t know until we see the regulations.”

This story has been corrected to show that the Blockchain Association Executive Director, not the association, contributed to Emmer.

Learn more about cryptocurrency: https://apnews.com/hub/cryptocurrency

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