The state of the Tornado Cache is a puzzle wrapped in a puzzle. Why did OFAC approve a piece of software? And why did the Dutch authorities arrest the sole developer? Those are not the questions we will answer today. OFAC updated Frequently asked questions on Tornado Cash-related matters. The answers are focused on the details of the restrictions and not the big questions.
We’ll take them, though. They’re entertaining and illuminating, just like the whole Tornado Cache situation is.
OFAC clarifies Whirlwind cash sanctions
In yesterday’s update of OFAC’s FAQ, Tornado Cache was the subject of choice. US government enabled A form to file a licensing request And announced that users can recover their funds:
“For transactions involving Tornado Cash initiated prior to its designation on August 8, 2022, but not completed by the date of designation, a U.S. person or a person transacting within U.S. jurisdiction shall be subject to OFAC in a transaction involving May request a specific license to engage in virtual currency. US individuals must, at a minimum, be prepared to provide all relevant information regarding these transactions with Tornado Cash, including wallets for the sender and the beneficiary The address, transaction hash, date and time of the transaction, as well as the amount (amount) of the virtual currency.
Hence, frozen funds are expected if the user is willing to go through a few hops and KYC-like processes. It’s not perfect, but we would qualify the developments as good news. Another thing that sounds like good news, OFAC will not prioritize any process related to dust.
“OFAC is aware of reports following the designation of Tornado Cash that certain US individuals may receive unwanted and modest amounts of virtual currency or other virtual assets from Tornado Cash, commonly referred to as “dusting.” Technically, OFAC rules will apply to these transactions.”
That’s all well and dandy, however, the dust still casts a shadow over the entire operation. There is no way to know if some accounts were dusted or if the owner took advantage of the situation to rob his Tornado Cash funds. Still, in some cases, OFAC will save some wallets and accounts by ignoring the dust.
ETH price chart for 09/14/2022 on Gemini | Source: ETH/USD on TradingView.com
These actions are not prohibited
Make no mistake, “US individuals are prohibited from engaging in transactions involving Tornado Cash, including virtual currency wallet addresses identified by OFAC.” However, “interacting with open-source code, in a manner that does not involve prohibited transactions with Tornado Cash, is not prohibited.” This seems like a trivial matter, but it makes some of the protests against the Tornado cash sanctions irrelevant:
“For example, US sanctions rules prohibit US individuals from copying open-source code and making it available online for others to view, as well as from discussing, teaching, or including open-source code in written publications.” Absent additional facts, such as textbooks. Similarly, American persons will not be prohibited by US sanctions regulations from visiting the Internet archives for the Tornado Cash historical website, nor from visiting the Tornado Cash website. Will be banned if it becomes active again on the Internet.
Is everything clear now? no chance. As new questions arise about sanctions, the situation is more interesting than ever. And now, we know that not all funds have been destroyed and will not be prosecuted. However, why is OFAC targeting a smart contract? The answer is not clear yet. Nor alone is the reason for the developer’s arrest.
baby steps.
Featured Image by larry from Pixabay | Charts by TradingView