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 on Twitter, stating that the DOJ’s argument that non-custodial software can be considered a money transmission service contradicts existing Treasury guidance and violates the rule of law.
Lummis’ criticism comes after the DOJ arrested the founders of Samourai Wallet on charges of money laundering and operating an unlicensed money-transmitting business. The DOJ also recently opposed the attempt by Tornado Cash developer Roman Storm to dismiss charges brought against him, including violating sanctions laws.
These actions by the DOJ have raised concerns within the crypto community, as they could have implications for the legality of owning and holding digital asset wallets. Lummis stressed the importance of protecting property rights and vowed to fight for individuals’ rights to hold their own keys and run their own nodes.
The DOJ’s actions against Tornado Cash and Samourai Wallet indicate the government’s willingness to treat crypto mixers as unlicensed money transmitters, which could lead to increased regulatory actions in the sector. The main argument revolves around whether crypto mixing safeguards privacy or enables illicit activity.
Infamous hacking groups, such as the Lazarus Group sponsored by North Korea, have used crypto mixers like Tornado Cash for money laundering purposes. The DOJ alleges that Tornado Cash facilitated over $1 billion in money laundering transactions for the Lazarus Group.
Samourai Wallet 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 the case against Samourai Wallet is just beginning, Roman Storm is pushing back against the government’s case, arguing for users’ right to privacy. Storm’s lawyers have stated that he is simply a developer who aimed to provide financial privacy to legitimate cryptocurrency users and that this should not be considered a crime.
It remains to be seen whether Lummis and other lawmakers will take congressional action against what many in the crypto community view as executive overreach. There is also uncertainty regarding the potential repercussions that self-custody wallet users may face for engaging in what the government perceives as unlicensed money-transmitting activities.