US Treasury – You Are Not Breaking Sanctions by Sharing Tornado Cash Code

The U.S. Treasury Department has released further clarifications on the sanctions placed on the popular cryptocurrency mixer Tornado Cash. The department stated that the sanction does not affect the rights of individuals in the U.S. to view and disseminate the open-source Tornado Cash code. 

The body made the clarification in a newly published Frequently Asked Questions (FAQs) on its website. While performing any transactions with the crypto mixer is prohibited, interacting with the open-source code in ways that do not involve prohibited transactions is not prohibited, the Treasury said. 

“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, as well as discussing, teaching about, or including open-source code in written publications, such as textbooks, absent additional facts,” the statement read. 

It added that the sanctions do not prohibit U.S. persons from visiting the archived copies of the deleted Tornado Cash website and they also will not be prohibited from visiting the website if it again becomes active on the internet. 

The response answers the question of what is prohibited as a result of OFAC’s designation of Tornado Cash. 

The Treasury also made several other clarifications, revealing that individuals whose transactions – those made before the designation of the mixer – had been frozen can complete their transactions by filing a licensing request from the OFAC. 

Additionally, it noted that wallets that have been the target of “dusting” transactions – where wallets received unsolicited and nominal amounts of crypto – will receive lenient enforcement as long as the “transactions have no other sanctions nexus besides Tornado Cash.” 

Treasury facing pushback from its Tornado Cash sanction 

The Treasury’s statements are largely in response to criticisms and pushback the watchdog has received since sanctioning Tornado Cash. 

The department alleges that the mixing service has been used to launder more than $7 billion worth of crypto since 2019, including laundering around $1 billion for the North Korea-sponsored cyber criminals, the Lazarus Group. 

According to a Reuters report, market participants have questioned the constitutional grounds on which the Treasury is imposing the sanction. A group of Tornado Cash users, with backing from crypto exchange Coinbase, have filed a lawsuit against the watchdog stating that the sanction is an infringement of citizens’ right to free speech.  

Similarly, cryptocurrency lobby group Coin Center released a statement saying that the OFAC exceeded its statutory authority by treating autonomous code as a “person.”