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Senators Lummis and Wyden Challenge DOJ Over Bitcoin Mixer Prosecutions

Senators Lummis and Wyden Challenge DOJ Over Bitcoin Mixer Prosecutions

May 13, 2024

Senators Lummis and Wyden Challenge DOJ Over Bitcoin Mixer Prosecutions

Recent bipartisan concern has arisen over the U.S. Department of Justice's (DOJ) use of money-transmitter laws in prosecuting Bitcoin mixing services. Senators Cynthia Lummis (R-Wyo.) and Ron Wyden (D-Ore.) have openly challenged Attorney General Merrick Garland, arguing that the DOJ's legal interpretation is unprecedented and could criminalize software developers for simply writing code.

The senators' contention stems from cases against Bitcoin mixers like Samourai Wallet and Tornado Cash, which the DOJ has accused of operating as unlicensed money-transmitting businesses. In a letter to Garland, the legislators argue that these services are not money transmitters based on prior views from the Treasury Department's Financial Crimes Enforcement Network (FinCEN), which has historically not treated non-custodial Bitcoin services as money transmitters.

Wyden expressed strong reservations about the DOJ's stance, stating, "I’m concerned the DOJ’s interpretation would treat software developers as criminals for merely writing and publishing code used by others – a dangerous precedent that contradicts decades of settled law and raises serious First Amendment concerns."

The senators took issue with the DOJ's court filing from last month, which argued that anything facilitating the transfer of funds, including software, meets the legal definition of a "money transmitter." The senators countered by saying the rule requires the service to take control of the funds to be considered a transmitter, a nuance they believe the DOJ is overlooking.

Lummis highlighted the overreach of the DOJ's interpretation, comparing it to blaming a highway for a bank robber's escape, emphasizing that "Wallet software is no more to blame for illicit finance than a highway is responsible for a bank robber's getaway car."

The current debate comes as Congress is attempting to pass comprehensive U.S. rules for "digital assets." However, with significant legislation expected to face a vote by the House of Representatives soon, the chances of a broad legislative framework becoming law this year remain slim.

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