Try applying your argument to the electric company. If a service operator has knowledge of a specific crime being committed one can make the argument that they're obligated to report the known details. But in general knowing that nonspecific criminals may be using your service does not imply that you have to shut your service down to hinder those criminals.

Tornado Cash isn't an electric company, though. There are different rules. Financial institutions are often subject to KYC rules that require them to proactively vet their customers.

You're writing as though this were uncharted legal territory, trying to reason from first principles when you can truly consider a business a criminal enterprise, but we've had laws on the books for decades for the express purpose of stopping people from doing exactly what Tornado Cash does.

The traditional financial system has coasted along on having two different sets of rules - one for consumer-facing things where you can do whatever you want with anonymous cash up to a certain amount, and one for Big Serious Transactions. The distinction between those two regimes is breaking down, and I don't want to see consumer privacy get left behind. Thus it's appropriate to reason from first principles about what ought to be, and not simply what regulations law enforcement has been able to get pushed through to make their own jobs easier. Individuals should not have everything we purchase be permanently recorded in order to convince us to buy more crap or price discriminate or whatever. Financial privacy is a key part of that.