The U.S. Treasury has allowed users to withdraw digital assets from Tornado Cash–affiliated addresses. To do so, a license from OFAC is required.
“For Tornado Cash-related transactions initiated before the service’s inclusion on the list on August 8, 2022, but not completed by that date, U.S. persons or persons conducting transactions within U.S. jurisdiction may request OFAC a special license to conduct virtual currency operations,” the regulator said.
According to the press release, to obtain permission to withdraw assets, the user must provide information about related operations. In particular, in a dedicated form, indicate the sender and recipient wallet addresses, the transfer amount, transaction hashes, as well as the date and time of their execution.
OFAC stressed that it intends to “adopt a favorable policy toward such requests” if the operations under consideration are not connected to other sanction actions. Engaging in such transactions without a license is a violation.
The regulator noted cases where users, without a request sent modest sums from addresses affiliated with the mixer:
“Formally, OFAC provisions apply to these operations. However, to the extent that these “dust” transactions have no other sanction-related connections besides Tornado Cash, OFAC will not prioritise enforcement.”
The agency also explained that, despite the blocking of Tornado Cash’s website and the inclusion of related addresses on sanctions lists, “interaction with open-source code itself is not prohibited” if it does not involve illicit deals.
“For example, under U.S. sanctions, U.S. persons are allowed to copy open-source code and publish it online for others to view, as well as discuss, teach or include in written publications such as textbooks,” the statement said.
Coin Center’s head of research Peter Van Valkenburgh called the publication a “pyrrhic victory” for the industry. He said the regulator would continue banning “the use of tools residing at specific addresses.” He stressed that this goes beyond OFAC’s mandate and curtails freedom of speech.
To be clear, this is a pyrrhic victory. No one expected OFAC to actually come right out and ban code publication. Instead, they continue banning the usage of tools residing in specific addresses even though that also chills speech and is outside their statutory authority.
— Peter Van Valkenburgh (@valkenburgh) September 13, 2022
Earlier, Coin Center said they intended to appeal the sanctions against Tornado Cash.
Meanwhile, in the community, it was noted that OFAC’s stance on interacting with open-source code could allow unblocking the project’s repository on GitHub.
Hey @github, please unban @TornadoCash code repositories now.
OFAC has stated: “U.S. persons would not be prohibited by U.S. sanctions regulations from copying the open-source code and making it available online for others to view”
— prestonvanloon.eth (@preston_vanloon) September 13, 2022
As reported, the cryptocurrency exchange Coinbase supported a lawsuit against the U.S. Treasury over sanctions related to Tornado Cash.
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