Sen. Elizabeth Warren (D-Mass.) on Tuesday sounded the alarms on the potential of Russian elites using cryptocurrency “mixers” as a way of avoiding U.S. sanctions placed on the country and many of its oligarchs in the wake of the Kremlin’s invasion of Ukraine.
Crypto mixers are used to increase the anonymity of users and their transactions, including as a way to disguise the origins of their funds. Mixers are typically used by crypto holders to maintain privacy on the Ethereum blockchain, sometimes for legitimate reasons; however, some officials worry that they can also be used to launder money.
During Tuesday’s Senate hearing on Russian sanctions, Warren denounced the crypto industry, pointing to Tornado Cash, a prominent mixing service, which was recently sanctioned by the Treasury Department for laundering over $7 billion in virtual currency.
“I’ve had serious concerns about Russian elites potentially using cryptocurrency to evade sanctions,” Warren said at the hearing. “We already knew that countries like North Korea had used crypto to skirt sanctions and launder at least hundreds of millions of dollars, and Russia could easily be part of that.”
Warren also criticized Coinbase, the largest U.S.-operated cryptocurrency, which has backed a lawsuit by users of Tornado Cash against the Treasury Department, alleging that the department went beyond its authority in issuing such sanctions.
Elizabeth Rosenberg, an assistant secretary for terrorist financing and financial crimes at the Treasury Department told Warren that it is possible Russian oligarchs could use these currencies to evade sanctions.
But Rosenberg added that sanctions such as those imposed on Tornado Cash could serve as a deterrent for future money launderers.
“That’s an effective avenue we can use in order to signal that we can not tolerate money laundering, so whether that’s for a Russian criminal actor, Iranian, North Korean, or wherever they may come from,” she said.
In March, Warren introduced the Digital Asset Sanctions Compliance Enhancement Act, aimed at providing additional sanctions towards Russia, as well as more transparency when it comes to digital assets.
“One thing I’ve learned over the past couple of years is when the crypto boosters cry the loudest, you’re probably on to something,” Warren said. “If crypto has nothing to hide on money laundering or oligarchs or drug lords or tax evaders, then they shouldn’t mind a little transparency.”