US Treasury Offers Users A Way To Recover Funds From Crypto Mixer Tornado Cash

The US Treasury Department said US residents and citizens can apply for a license to retrieve any funds they have that are locked in the now-banned Ethereum coin-mixing tool Tornado Cash. The Treasury Department’s decision to ban Tornado Cash in August sent the crypto community into a frenzy over privacy and government surveillance and left many wondering if their day-to-day crypto activity could result in criminal charges. The Treasury’s Office of Foreign Asset Control (OFAC) also addressed other pressing issues regarding the implications of its sanctions on Tornado Cash.

The new guidelines provide users with a way to legally withdraw their funds from the private transaction app by applying for an OFAC license – an authorization from OFAC to engage in a transaction that would otherwise be prohibited.

There is currently around $173 million (about Rs 1,400 crore) left in the Tornado Cash smart contract, at press time, according to DefiLlama. Some of these funds are likely owned by users who are concerned about the legal repercussions of withdrawing them.

Three plaintiffs with funds in Tornado Cash filed a lawsuit against the Treasury Department last week, arguing that the sanctions had frozen their legally deployed assets – a case that could be affected now, because there is an available way to withdraw funds.

Following the initial announcement of the sanctions, anonymous users protested by “dusting” or sending small amounts of ETH via Tornado Cash to various crypto wallets, including those of high-profile celebrities. OFAC regulations would apply to those transactions, but OFAC will not “prioritize enforcement” regarding this matter, according to the guidelines.

The Tornado Cash website was taken offline after the sanctions, but the Tornado Cash app is still accessible through other means. Any transaction with Tornado Cash remains prohibited to US citizens and residents.


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