US authorities issue guidance on Tornado Cash

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US authorities issue guidance on Tornado Cash

Authorities said users need a license to retrieve funds from a Sanctioned mixer.

The cryptocurrency stored on Tornado Cash can now be recovered by the U.S. Treasury Department, allowing residents of the state to apply for a license.

On September 13 U.S. authorities published guidance about its sanctions of the cryptocurrency mixing service, Tornado Cash. The officials said that U.S. persons with assets deposited in the protocol can request a specific license from the Office of Foreign Assets Control to withdraw their funds.

A person requesting a license must provide detailed information about the past transactions involving Tornado Cash, such as the wallet address, date and time of the transaction, the sum of crypto assets sent to Tornado Cash, and previous transaction hashes.

While transacting via Tornado Cash is banned by the sanctions, interacting with the protocol's underlying code is non-negotiable.

The resulting arrest of a Tornado Cash developer in the Netherlands suggested 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 had suggested that the incident was likely unrelated to Tornado Cash.

The Department of Labor's clarifications indicate that OFAC is not combating open-source development, but instead is combating money laundering by monetizing the proceeds from cybercrime.

The Treasury Department said that OFAC is aware of reports about unsolicited transactions bringing small amounts of crypto assets to well-known wallets of celebrities and other famous figures via Tornado Cash.

On Thursday, headline changed to reflect that crypto assets in Tornado are not frozen.