The U.S. Treasury Department has published a guide with a series of steps for U.S. citizens to follow in order to withdraw their funds from Tornado Cash. Tornado Cash was a cryptocurrency mixing service banned by the U.S. Treasury Department on 8th August 2022. The sanction came after investigations revealed that the platform was being used to launder money because of its transaction obfuscation features.
As stated in the U.S. Treasury Department’s guidelines, U.S. users of Tornado Cash must apply for a special license from OFAC in order to withdraw any funds deposited on Tornado Cash on or before August 8. Users will also be required to provide information about the transactions including the wallet addresses of both the sender and the receiver.
OFAC also reaffirmed the sanctions on Tornado Cash, stating that “U.S. persons are prohibited from engaging in transactions involving Tornado Cash. Therefore, using the platform would be considered a violation of U.S. sanctions prohibitions.” According to OFAC, citizens can interact with Tornado Cash’s open source code without violating the sanctions. This is aimed at ending weeks of speculation about the extent of the sanctions and how they conflict free speech.
Tornado Cash tweeted yesterday that all of the organization’s GitHub accounts and those of its contributors were banned. However, a fork of the code was preserved on Github by Johns Hopkins for teaching and research purposes.
The arrest of Alexey Pertsev, one of the developers of Tornado Cash (who was denied bail), sparked outrage and widespread outspoken criticism in the cryptocurrency ecosystem to the point that Coinbase, the largest cryptocurrency exchange in the U.S., financially backed a class action lawsuit against the Treasury Department to defend all users who were affected by the sanctions.
Vitalik Buterin (Ethereum Creator) and Paul Grewal (Coinbase’s chief legal officer) revealed that they used Tornado Cash because of its anonymity when making transactions. They argued that the platform allowed them to send their donations anonymously to Ukraine without falling victim to hackers or the Russian government.
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