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The Stanford Blockchain Club has issued a scathing criticism of the US Department of Justice (DOJ). Prosecution to Tornado Cash Developers Roman Storm and Roman Semenov, calling it a bypass of outdated federal money transfer laws.
In its report titled “Tornado Cash and the Limits of Money Transfer,” the club challenged the Department of Justice’s use of 18 USC § 1960, a law targeting unlicensed money transfer companies, to charge fees to the developers of Tornado Cash, a decentralized company. Ethereum-Existing protocol.
The Justice Department’s 2023 indictment described Tornado Cash as an “unlicensed money transmitter” for enabling users to anonymize cryptocurrency transactions.
The Stanford Blockchain Club argued that the platform, which was written before the advent of blockchain technology, failed to address the nuances of decentralized protocols like Tornado Cash, which operate through immutable smart contracts without intermediaries or custodians.
According to the report:
“The Department of Justice’s aggressive application of 18 USC § 1960 raises broader questions about the dangers of extending statutory language to include new technologies. This approach invites non-elected officials and the judiciary to exceed their constitutional limits, and to override Congress’s authority to legislate.
The report emphasized the constitutional implications of using executive enforcement to regulate emerging technologies. He warned against such behavior Circumventing the democratic process And risk stifling innovation by confusing legal use cases for privacy tools with illicit activity.
Stanford University, known for its leadership in legal and technological innovation, has a history of tackling complex regulatory challenges. The Blockchain Club report continues this tradition by delving into the tension between privacy rights and regulatory oversight in digital finance.
The Tornado Cash case highlights the growing debate around financial privacy and the risk of these new technologies being abused by bad actors.
Proponents, including the Stanford Blockchain Club, argue that protocols like Tornado Cash meet legitimate privacy needs by allowing individuals to protect their identities in transactions. At the same time, critics assert that such tools facilitate money laundering and other illegal activities.
The release of the report represents a significant contribution to the ongoing discussions about how the US legal system can adapt to DeFi technologies. It remains to be seen whether the judiciary will consider such criticisms as it continues to grapple with the complexities of blockchain regulation.
