The Treasury Department announced Tuesday that US residents and citizens can apply for a license to retrieve any funds they have locked up in Tornado Cash.
The Office of Foreign Asset Control (OFAC), the Treasury Department's sanctions watchdog, updated its “frequently asked questions” (FAQs) document on Tuesday to provide guidance for the crypto industry on how people and companies can remain compliant with sanctions against Tornado Cash, the Ethereum privacy mixer blacklisted last month on allegations that North Korean hackers used it to launder funds.
The crypto community was outraged by the sanctions, with questions ranging from whether software could be sanctioned to how customers using Tornado Cash for legal purposes could reclaim any assets held in the tool's smart wallets. While Treasury did not address the software concerns, the FAQs stated that users might obtain an OFAC license in order to withdraw their assets.
“U.S. residents should be prepared to give all relevant information regarding these Tornado Cash transactions, including the remitter and beneficiary's wallet addresses, transaction hashes, the date and time of the transaction(s), and the amount(s) of virtual currency. OFAC's licensing stance toward such applications would be favorable, provided that the transaction did not contain any other sanctionable conduct “According to the FAQs.
Last Monday, a group of individuals supported by cryptocurrency firm Coinbase sued the Treasury, citing the locked funds issue.
The FAQs also addressed the fact that after the penalties were revealed, many attempted to prank celebrities by giving them small sums of ether via Tornado Cash.
According to the FAQs, while US citizens “are forbidden from engaging in” any Tornado Cash transaction, if a US citizen receives a little amount unsolicited, they are not required to immediately disclose the transaction, according to OFAC.
In its original sanctions statement, OFAC stated that Lazarus Group, a North Korean-linked hacker outfit, had transmitted millions of dollars in cryptocurrency through Tornado Cash, stating that around 20% of the mixer's throughput was associated with criminal conduct.
“North Korea has increasingly relied on illicit activities, including cybercrime, to fund its weapons of mass destruction and ballistic missile programs,” stated a Treasury spokesperson via email.
“U.S. persons must comply with these sanctions. More broadly, we call on the cryptocurrency industry to do its part to prevent illicit activity – nation-state or otherwise – as that is what ‘responsible innovation' requires, ” according to the spokesman. “This would include ensuring adequate cybersecurity measures, implementing know-your-customer measures, and complying with sanctions and anti-money laundering obligations. Treasury looks forward to continued dialogue with the virtual currency industry on these issues.”