Treasury Finally Responds To Tornado Cash Ban

After it banned Ethereum coin mixer Tornado Cash, the US Treasury had maintained its silence, which it finally broke on Tuesday.

The US Department of Treasury disclosed a path that can be used by Tornado Cash users for recovering their funds and also answered other major questions associated with the implementation of the sanctions.

The ban

The decision of the Treasury Department of banning the Tornado Cash mixer back in August had thrown the entire crypto community into chaos because of government oversight and privacy concerns.

Likewise, a number of people had been forced to wonder if they could face criminal charges because of their everyday crypto activities.

At the time, the Office of Foreign Asset Control (OFAC) of the Treasury had claimed that they had imposed the ban because the coin mixer was facilitating terrorism and money laundering.

An update was made to the FAQ section of the OFAC website on Tuesday, which said that they would provide users of Tornado Cash a way to withdraw their funds legally from the platform, which is now blacklisted.

The update

The Treasury had blacklisted the Tornado Cash mixer on August 8th, which meant that American citizens could no longer interact with the tool.

The update said that those who had deposited funds into the tool before the ban would now have the option of getting in touch with OFAC to ask for a special license.

If the license is granted, then they would be allowed to access and then withdraw their money. The Treasury said that the licensing policy would be favorable towards such apps.

However, this would only be applicable for transactions that do not involve any questionable conduct.

Furthermore, the update said that people will not be at risk of criminal prosecution if they had sent a small amount of funds affiliated with Tornado Cash non-consensually.

Other details

A number of wallet addresses had also been blacklisted in the sanctions that OFAC had imposed on Tornado Cash and they were linked with the mixing tool.

Anyone who interacts with the addresses in question would be considered conducting business with a terrorist organization, or hostile government.

After the sanctions were imposed, an anonymous user of Tornado Cash had trolled a number of celebrities including Logan Paul and Jimmy Fallon by ‘dusting’ them.

This meant that they had sent them a small amount of Tornado Cash-linked funds and this had potentially left these celebrities exposed to criminal liability.

The government’s announcement said that individuals, including the dusted celebrities, would not have to worry about enforcement action, as long as they have received nominal and unsolicited crypto from Tornado Cash.

But, this kind of position still leaves a lot of things in the air because the Treasury did not clarify what amount would be considered ‘nominal’.

In addition, it did not clarify how they would determine what transactions were ‘unsolicited’.

The Treasury also said that while Americans cannot engage with the tool, they can share information about it, including its open-source code.