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US Treasury Clarifies Policies for Tornado Cash, a Sanctioned Crypto Mixing Service

18-Sep-2022 By: Simran Mishra
US Treasury Clarifie

The U.S. Department of the Treasury has responded to certain 

Inquiries regarding Tornado Cash, a recently approved crypto mixer, and regulatory compliance. 

The solutions cover how to withdraw cryptocurrency, finish transactions started with Tornado Cash before it was sanctioned, and handle "dusting" transactions.

Tornado Cash FAQs are published by the Treasury Department

The sanctioned cryptocurrency mixing service Tornado Cash was the subject of some commonly asked questions, which the U.S. Department of the Treasury responded to on Tuesday. The Office of Foreign Assets Control (OFAC) of the Treasury Department sanctioned the Ethereum-based mixer on August 8 and forbade U.S. citizens from transacting with Tornado Cash or any frozen assets or interests in assets.

How to finish Tornado Cash transactions that were started before the sanction is one of the queries. Treasury Department: U.S. persons or persons conducting transactions within U.S. jurisdiction may request a specific licence from OFAC to engage in transactions involving the subject virtual currency in order to complete the transactions or withdraw cryptocurrency without contravening U.S. sanctions regulations.

The Treasury advises U.S. citizens to be prepared to provide, at the very least, all relevant information about these Tornado Cash transactions, such as the sender and recipient's wallet addresses, transaction hashes, the date and time of the transaction(s), and the amount(s) of virtual currency involved.

The reporting requirements for "dusting" transactions are the subject of another query. The Treasury stated that Tornado Cash may have engaged in "dusting," the practise of sending unsolicited, small quantities of virtual money or other virtual assets to individuals in the United States.

The Treasury clarified that even though technically OFAC's requirements would apply to dusted transactions, OFAC will not prioritise enforcement against the delayed delivery of initial blocking reports and subsequent annual reports of blocked property from such U.S. persons.

The Treasury emphasised that U.S. citizens are not allowed to conduct Tornado Cash transactions, even through the virtual currency wallet addresses that OFAC has listed.

Attorney Jake Chervinsky shared his thoughts on the OFAC's clarification in a series of tweets. He emphasised that the FAQs do not entirely address the collateral damage caused by the designation. Chervinsky said that Americans shouldn't have to "apply" for their own money in response to the OFAC's requirement that each applicant submit a separate licence request.

Regarding dusting, he stated that since victims must submit initial blocking reports as well as annual reports afterward, Enforcement is still an option if those reports are submitted late.

Coin Center, a non-profit organisation that focuses on the regulatory challenges posed by cryptocurrencies, declared that the OFAC had exceeded its legal powers after sanctioning Tornado Cash.


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