It's one thing to do "regulation by enforcement," as we've arguably seen from the SEC. It's even worse to see the DOJ engage in regulation by criminal prosecution.
That's exactly what is happening with the unlicensed money transmission charges against Tornado Cash and Samourai devs.
That's exactly what is happening with the unlicensed money transmission charges against Tornado Cash and Samourai devs.
Make no mistake. If the prosecution successfully argues unlicensed money transmission in either case it will overturn all of the good guidance and administrative rulings we've gotten from the actual federal AML regulator, FinCEN, over the last 10 years. The Tornado Cash reply brief already spells it out: basically argues that the guidance (upon which everyone has relied) is irrelevant.
This is also particularly infuriating because the standard for interpreting law in criminal cases is lenity. That means that if there is any ambiguity in the applicable law it must be interpreted in favor of the defendant. To me the applicable law is unambiguously against a charge of unlicensed money transmission for non-custodial devs. Even if there is ambiguity, the devs should still win via lenity. The prosecution therefore has to argue that not only is the law the opposite of what FinCEN has said it is for the last 10 years, but that it is unambiguously the opposite.
And if it really comes to that, the Court finds that the law has been the opposite to what the guidance stated for 10 years, then we have serious constitutional problems. Due process demands that citizens are given a clear statement of the law before serious charges are levied against them. Additionally, if that's the law, if devs are not allowed to write software that enables self-custody without including state surveillance tools, then the law itself is unconstitutional for reasons we've unpacked in two very important reports:
1.
Arguing that first and fourth amendment rights preclude laws forcing devs to write wallet software that surveils its users. And...coincenter.org/electronic-cas…
Arguing that first and fourth amendment rights preclude laws forcing devs to write wallet software that surveils its users. And...coincenter.org/electronic-cas…
2.
Arguing that a decision of such magnitude (subjecting software developers to financial regulation) cannot be appropriately made by the executive or judicial branches and must be left to Congress. Major questions doctrine and non-delegation arguments.coincenter.org/broad-ambiguou…
Arguing that a decision of such magnitude (subjecting software developers to financial regulation) cannot be appropriately made by the executive or judicial branches and must be left to Congress. Major questions doctrine and non-delegation arguments.coincenter.org/broad-ambiguou…
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