Tornado Cash in itself does is not launderying money because you still have to prove to the IRS how you got the money or the asset(i.e bills, invoice etc) and you still have to obey KYC rules. You can't just say the money is from Tornado Cash and be done with it.
Is the U.S Mint a money launderying service because it provides an untraceable method (cash) to conduct transactions?
Both the Treasury and Dutch authorities have reason to believe that Tornado Cash was operated with the intent of facilitating money laundering. It's up to a court to determine the veracity of that accusation.
In the mean time, yes: the government is allowed to halt activities that it believes are part of an active criminal scheme. Every country with a functioning legal system proscribes this, and establishes a broad swath of controls to ensure that the government can't indefinitely tie up resources.
It is my understanding, that $10,000 at the time this law was set, was about ¼ the price of a small home.
Really good question.
I'd say "if your privacy feature allows you to trade above the trigger limit (usually 10K USD/EUR/GBP) without having to state the source of your funds, then it's actually a money laundering feature"
I've worked in the finance industry, and I've worked with people who've seen bad guys turn up with suitcases full of other people's money. I'm totally happy that these regulations are in place.
You are wrong.
FINCEN "Money laundering involves disguising financial assets so they can be used without detection of the illegal activity that produced them."
WIKIPEDIA "Money laundering is the process of concealing the origin of money obtained from illicit activities such as drug trafficking, corruption, embezzlement or gambling, by converting it into a legitimate source."
You don't get to shift regulatory burden to the consumer.