Authorities say users need a license to retrieve funds from Sanctioned mixers.
The US residents with cryptocurrency trapped on Tornado Cash may now apply for a license from the U.S. Treasury Department to retrieve their funds.
On September 13 U.S. authorities published guidance about its sanctions of the crypto mixing service, Tornado Cash. U.S. persons with assets deposited in the protocol can apply for a specific license from the Office of Foreign Assets Control to withdraw their funds.
When requesting a license, individuals must provide detailed information about the past transactions involving Tornado Cash, such as the wallet address, the date and time of the transaction, the sum of crypto assets sent to Tornado Cash, and previous transaction hashes.
The release also states that while transacting through Tornado Cash is prohibited by the sanctions, interacting with the protocol's underlying code is not.
The arrest of a Tornado Cash developer in the Netherlands indicates authorities were taking action against developers for working on the protocol's code.
Jake Chervinsky, the head of policy at the Blockchain Association in Washington, argued that the lack of U.S. involvement in the arrest suggested that the incident was likely unrelated to Tornado Cash.
The Treasury Department's clarifications indicate that OFAC is not taking steps to protect open-source software, but instead is fighting money laundering the proceeds from cybercrime.
The Treasury Department also said OFAC is aware of reports regarding unsolicited transactions sending small amounts of crypto assets to well-known wallets of celebrities and other prominent figures via Tornado Cash.
The headline has been changed to reflect that crypto assets in Tornado are not frozen.