Pro Crypto, Anti Privacy: Will Trump Free Samourai?

Last month, the Treasury lifted sanctions on Tornado Cash. In response, many rekindled their calls for the Trump administration to drop the charges against Keonne Rodriguez and William Lonergan Hill, the developers of Samourai Wallet who are currently being prosecuted in the Southern District of New York.

What many appear to have missed is that the Treasury’s sanctions reversal for Tornado Cash also revealed the Treasury’s stance on privacy services. And it isn’t looking good.

Tornado Cash’s removal from OFAC’s SDN list followed a lawsuit by Tornado Cash users in a Texas District Court case that has become known as Van Loon v. US Department of the Treasury, in which it was argued that the sanctioning of the software was unlawful and violated the right to free speech.

The lawsuit went to appeal in the Fifth Circuit, where three judges ruled that sanctioning a software like Tornado Cash was indeed unlawful, as OFAC’s SDN list was reserved for businesses, foreign nationals, and property – of which Tornado Cash is neither.

The Fifth Circuit, in turn, directed the Texas District Court to grant the plaintiff’s motion for partial summary judgement, which would constitute a binding court order that software like Tornado Cash cannot be sanctioned by the US Government under current sanction laws.

Now the Treasury is fighting back, in attempts to avert the judgement that would strip the agency of its powers to sanction immutable privacy software, by arguing that a judgement is not needed because Tornado Cash has been removed from the OFAC list. But without the judgement, the agency could continue to sanction software that works like Tornado Cash, and even re-sanction Tornado Cash itself.

The sanctions reversal on Tornado Cash has little to do with the prosecution of Samourai Wallet developers, as neither are charged with sanctions evasion.

But the criminal prosecution of Tornado Cash developer Roman Storm is extremely important to their case, as it may set precedent for the prosecution of Rodriguez and Hill, who have been charged with conspiracy to operate an unlicensed money transmitter and conspiracy to commit money laundering.

Both Tornado Cash and Samourai Wallet are purely non-custodial software projects, which have long been understood to be exempt from falling under anti-money laundering frameworks usually applied to banks. If Storm is found guilty in July, the Government would have a much easier time to successfully prosecute the two Bitcoin developers as well. 

While many were hopeful that the new administration would put an end to the former administration’s witch hunt on cryptocurrency developers, it seems that Trump’s Treasury is just as unfavorable to the development of privacy code. 

As CoinCenter pointed out at the end of last year, a pro-crypto administration does not necessarily equal a pro-privacy and pro-financial freedom administration. It seems that we are now witnessing what this means: while lawsuits are…