The recent ruling by a US judge has stirred up controversy within the crypto community, as it clarifies that control of money is not a prerequisite for operating as a money transmitter. This decision has significant implications for the crypto industry, particularly in cases involving Tornado Cash and Samourai Wallet.
In the ruling, the judge emphasized that business operators cannot disclaim responsibility for Bank Secrecy Act (BSA) requirements simply because they do not control money during its transmission. This ruling has sparked debate among industry players, with some believing that control of funds is essential for transmitting money, while the government has argued otherwise.
The case specifically impacts Tornado Cash and Samourai Wallet, whose co-founders are facing criminal charges for alleged BSA violations. Both defendants argued that they did not control the coins within their mixing services and therefore should not be classified as money transmitting businesses. However, the judge disagreed with their argument, allowing the government’s case against them to proceed.
To determine if a business is considered a money transmitter, courts typically consider four qualities: accepting funds, transmitting funds, control of funds, and providing instructions for funds. US prosecutors have classified services like Tornado Cash and Samourai as unlicensed money transmitting businesses that have violated BSA requirements.
The ruling has raised concerns among pro-crypto defenders, who see it as a potential threat to software developers’ free speech. Despite the ruling, defendants plan to appeal the decision, seeking further clarification on the matter.
Overall, the ruling serves as a significant clarification in a contentious area of law. While the law now states that money transmitters do not necessarily need to control funds during transmission, the debate surrounding this issue is far from over. Stay tuned for more updates as the case progresses.