Senator Cynthia Lummis of Wyoming has strongly criticized the U.S. Department of Justice (DOJ) for its aggressive stance on self-custody wallets. Lummis expressed her concerns after the DOJ brought unlicensed money-transmitting charges against crypto mixers Tornado Cash and Samourai Wallet. She took to Twitter to express her disappointment, stating that the DOJ’s argument contradicts existing Treasury guidance and violates the rule of law. Lummis emphasized that the DOJ’s actions threaten the fundamental property rights of Americans and pledged to fight for the right to hold one’s own keys and run their own node.
The arrest of Samourai Wallet founders Keonne Rodriguez and William Lonergan Hill on money laundering charges and operating an unlicensed money-transmitting business further fueled the controversy. The DOJ also opposed Tornado Cash developer Roman Storm’s attempt to dismiss charges brought against him, including violating sanctions laws. The swift legal action against these companies has raised concerns within the crypto community about the legality of owning and holding digital asset wallets in general.
The DOJ’s actions against Tornado Cash and Samourai Wallet indicate the government’s willingness to treat crypto mixers as unlicensed money transmitters, potentially leading to more regulatory actions across the industry. The main argument revolves around whether crypto mixing, a process used to obscure funds and enhance privacy, actually safeguards privacy or enables illicit activities. Crypto mixers like Tornado Cash have been used by hacking collectives, including the North Korean state-sponsored Lazarus Group, to launder funds.
The allegations against Tornado Cash include facilitating over $1 billion in money laundering transactions for the Lazarus Group. Samourai Wallet, on the other hand, is accused of executing over $2 billion in unlawful transactions and facilitating more than $100 million in money laundering transactions from illegal dark web markets. While Storm is pushing back against the U.S. government’s case, asserting users’ right to privacy, the case against Samourai Wallet is just beginning.
It remains to be seen whether Senator Lummis and other lawmakers will take congressional action against what many in the crypto community perceive as executive overreach. The outcome will determine whether self-custody wallet users will face repercussions for engaging in what the U.S. government considers unlicensed money-transmitting activities.
