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ARTICLE · 29 SEPTEMBER 2022

OFAC Issues FAQs To Clarify Tornado Cash Sanctions

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On August 8 2022, the U.S. Office of Foreign Assets Controls (OFAC) sanctioned "crypto-mixer" Tornado Cash, alleging that more than $7 billion worth of virtual currency had been laundered...

United StatesInternational Law
Paige Berges
Paige Berges

Background

On August 8 2022, the U.S. Office of Foreign Assets Controls (OFAC) sanctioned "crypto-mixer" Tornado Cash, alleging that more than $7 billion worth of virtual currency had been laundered through the protocol since it began operating in 2019, including over $455 million by the North Korean state-sponsored hacking group, the Lazarus Group (sanctioned by OFAC in 2019). In addition to sanctioning the Tornado Cash protocol and URL, OFAC also sanctioned several large wallets associated with Tornado Cash.

Unlike previous designations of wallet addresses, individuals, and entities (including the mixer, Blender.io), Tornado Cash is a decentralized, self-executing smart contract protocol. In fact, a lawsuit has been filed on behalf of users of the service challenging the Tornado Cash designation on the basis that it does not qualify as an entity, property or person. Moreover, the designation has also left many virtual asset service providers as well as ordinary

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