A coalition consisting of 34 crypto firms and advocacy organizations is urging Congress to challenge what they label an “unprecedented and overly expansive” legal stance adopted by the U.S. Department of Justice (DOJ) in its case against the developers of the crypto mixer Tornado Cash.

In a letter dated March 26, spearheaded by the DeFi Education Fund and supported by major players like Coinbase and Kraken, the coalition has warned lawmakers that the DOJ’s prevailing interpretation threatens to criminalize nearly all blockchain software developers.

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

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

The coalition claims that the DOJ’s legal tactics, introduced in an August 2023 indictment of Tornado Cash developers Roman Storm and Roman Semenov, endangers the entire digital asset development sector within the United States.

Storm, who has pleaded not guilty, is fighting to have his charges dismissed. Semenov, a Russian national, is currently evading capture.

The DOJ has similarly charged the founders of Samourai Wallet with money laundering, and those individuals have also maintained their innocence.

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

It also refers to 2019 guidance from the Financial Crimes Enforcement Network (FinCEN), clarifying that software developers who do not control user funds are not classified as 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 🧵⤵️ — DeFi Education Fund (@fund_defi) March 26, 2025

However, the DOJ seems to have overlooked these distinctions, applying its interpretation to prosecute non-custodial developers. Consequently, the coalition argues, this creates legal discrepancies between the positions of FinCEN and the DOJ, placing developers in an uncertain and potentially hazardous situation.

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

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

Earlier this week, the U.S. Treasury Department declared that no further court action is needed regarding its ongoing legal proceedings surrounding its 2022 sanctions on the crypto mixer Tornado Cash. The Treasury’s Office of Foreign Assets Control (OFAC) had initially blacklisted the platform, alleging its use by North Korea’s Lazarus Group for money laundering. In response, six users, backed by Coinbase, filed a lawsuit claiming that the sanctions were unlawful.

On March 21, the Treasury lifted the sanctions against Tornado Cash and its associated smart contracts, asserting that the case is now moot.

Nevertheless, Coinbase’s Chief Legal Officer, Paul Grewal, contested this, emphasizing that merely removing the platform from sanctions does not resolve the underlying legal questions central to the lawsuit.

Power does not recede voluntarily. It gasps and it gasps until it no longer can. @USTreasury filed yet another late Friday pleading against Tornado Cash. After begrudgingly 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

Key Takeaways

• A coalition of 34 crypto firms is urging Congress to oppose the DOJ’s interpretation of money transmission laws used in the Tornado Cash case.
• The group argues the DOJ’s stance could criminalize non-custodial software developers and threaten blockchain innovation in the US.
• Despite the Treasury removing Tornado Cash from the sanctions list, Coinbase insists the legal issues at the core of the case remain unresolved.