The US Treasury Department has released additional clarifications on the sanction imposed on popular cryptocurrency mixer, Tornado Cash. The department said the sanction does not affect the rights of individuals in the United States to view and distribute Tornado Cash open-source code.
He provided the clarification in a recently posted Frequently Asked Questions (FAQ) on his website. While transacting with the crypto mixer is prohibited, interacting with the open source code in a way that does not involve prohibited transactions is not prohibited, the Treasury said.
“American persons would not be prohibited by United States sanctions regulations from copying open source code and making it available online for others to view, as well as discussing, teaching, or including open source code in written publications, such as manuals, in the absence of additional facts,” the response reads.
He added that the sanctions do not prohibit US persons from visiting archived copies of the deleted Tornado Cash website. They will also not be banned from visiting the website if it becomes active again on the Internet. The answer answers the question of what is prohibited following the designation of Tornado Cash by OFAC.
The Treasury also provided several other details. It revealed that individuals whose transactions – those made before the mixer designation – had been frozen can complete their transactions by filing a license application with OFAC.
Additionally, he noted that wallets that have been the target of “dusted” transactions – where wallets have received unsolicited, nominal amounts of crypto – will receive lenient enforcement as long as the “transactions have not been ‘other sanctions bond than Tornado Cash’.
The Treasury faced with the decline of its Tornado Cash sanction
The Treasury statements are largely in response to criticism 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 the laundering of approximately $1 billion for North Korean-sponsored cybercriminals, the Lazarus Group.
According to a Reuters report, market participants have questioned the constitutional basis on which the Treasury imposes the sanction. A group of Tornado Cash users, with support from crypto exchange Coinbase, filed a lawsuit against the watchdog saying the penalty is a violation of citizens’ right to free speech.
Similarly, cryptocurrency lobby group Coin Center published a statement saying that OFAC exceeded its statutory authority by treating the stand-alone code as a “person”.