The US Treasury clarifies its Tornado Cash guidance and tells users who used the service for lawful transactions can apply for a license to withdraw their funds
The episode became an early test of how OFAC applies sanctions to autonomous code: later courts found the agency exceeded its authority over Tornado Cash's immutable smart contracts, and Treasury ultimately removed Tornado Cash from its blacklist.
First-order effects
People with funds tied to lawful Tornado Cash transactions gain an OFAC licensing path to seek withdrawal, rather than being categorically unable to access those funds.
OFAC retains the underlying designation while creating a case-by-case process that distinguishes lawful users from the sanctioned service and related wallets.
Second-order effects
The users' Texas lawsuit gains a concrete focal point: Treasury's licensing route addresses access to funds but does not resolve the challenge to the scope of the sanctions.
Crypto users and services handling affected assets must treat OFAC licensing as an operational requirement, increasing the compliance burden around transactions connected to Tornado Cash.
Third-order effects
The later appeals-court ruling on immutable smart contracts shows that sanctions enforcement against decentralized software faces a legal boundary distinct from sanctions on entities or owned property.
The sequence points toward more contested, tailored enforcement for decentralized financial tools, where regulators' access restrictions are tested against the technical question of what can be owned or controlled.
The trend: Sanctions policy is being forced to distinguish between illicit activity enabled by decentralized tools and the legal status of the autonomous software and lawful users caught in the restriction.
@matthew_d_green To be clear, this is a pyrrhic victory. No one expected OFAC to actually come right out and ban code publication. Instead, they continue banning the usage of tools residing in specific addresses even though that also chills speech and is outside their statutory a…
OFAC's new FAQs on the Tornado Cash sanctions provide important clarifications for open source code development, helping lift a speech chilling cloud on the mixer source code itself. https://home.treasury.gov/... https://twitter.com/...
The US Treasury has confirmed that they are NOT applying prior restraint to the #OpenSource code in Tornado Cash in breach of the first amendment, but rather sanctioning the instance that engaged in alleged illegal actions. https://home.treasury.gov/...
The North Koreans who hacked Ronin Bridge moved their stolen funds through four obfuscation tools: Blender, Tornado Cash, ChipMixer, and Wasabi. The US Treasury has since sanctioned Blender and Tornado. At what point does it designate ChipMixer and Wasabi?
Disappointed to see that this incomplete response from Treasury does not consider Americans' constitutional right to privacy while sanctioning of neutral, open-source, decentralized privacy software. https://home.treasury.gov/... https://twitter.com/...
1/16 US Treasury / OFAC released four new FAQs regarding Tornado Cash today. If you are impacted, or potentially impacted, you would be wise to read them directly. Here's a short breakdown, along with some unanswered questions. 🧵👇
The US Treasury published an FAQ on Tornado Cash... While most of the answers do not clarify anything, at least Question 1076 reaffirms that the publication, interaction and teaching about open-source code is not prohibited (a minor win in my books): https://home.treasury.gov/...…
Peter calls this a pyrrhic victory and he may well be right. Frankly, the fact that he was able to get the word “pyrrhic” through autocorrect means he's much smarter than me. https://twitter.com/...
1/ OFAC just published FAQs related to their designation of the Ethereum mixer Tornado Cash. TL;DR: no big surprises, some helpful guidance and reassurances, and many questions left unanswered https://home.treasury.gov/...
Called it: “open-source code itself, in a way that does not involve a prohibited transaction with Tornado Cash, is not prohibited.” The shitcoin legal grifters scared you and caused a chilling effect even though there was never a threat. https://twitter.com/...
The US Treasury now says US individuals may apply for a license to withdraw crypto which was deposited into Tornado Cash prior to Aug 8. This is a big step that can open the door for many who had used the service legally for maintaining privacy, to regain access to their funds. h…
1/ OFAC just released some much-anticipated guidance on Tornado Cash sanctions, in the form of FAQs found here: https://home.treasury.gov/... My thoughts and interpretations below as a former US Treasury officer👇
1/ Today, OFAC published FAQs related to Tornado Cash sanctions: https://home.treasury.gov/... We're glad that OFAC has heard our concerns & appreciate their effort to clarify these important issues. Yet, the FAQs don't fully address the collateral damage caused by the designatio…