On August 8, 2022, the U.S. Department of the Treasury’s Office of Foreign Asset Control (OFAC) sanctioned the virtual currency mixer Tornado Cash. OFAC states that Tornado Cash “has been used to launder more than $7 billion worth of virtual currency since its creation in 2019. This includes over $455 million stolen by the Lazarus Group, a Democratic People’s Republic of Korea (DPRK) state-sponsored hacking group that was sanctioned by the U.S. in 2019, in the largest known virtual currency heist to date. Tornado Cash was subsequently used to launder more than $96 million of malicious cyber actors’ funds derived from the June 24, 2022 Harmony Bridge Heist, and at least $7.8 million from the August 2, 2022 Nomad Heist.”
OFAC released subsequent guidance on September 13, 2022 explaining that U.S. residents and citizens can apply for a license to recover legitimate funds that may be tied up as a result of the sanction. Specifically, the OFAC guidance states:
For transactions involving Tornado Cash that were initiated prior to its designation on August 8, 2022 but not completed by the date of designation, U.S. persons or persons conducting transactions within U.S. jurisdiction may request a specific license from OFAC to engage in transactions involving the subject virtual currency. U.S. persons should be prepared to provide, at a minimum, all relevant information regarding these transactions with Tornado Cash, including the wallet addresses for the remitter and beneficiary, transaction hashes, the date and time of the transaction(s), as well as the amount(s) of virtual currency. OFAC would have a favorable licensing policy towards such applications, provided that the transaction did not involve other sanctionable conduct.
In order to apply for a specific license to complete a transaction or withdraw virtual currency involving Tornado Cash that was deposited prior to its designation, or to engage in other transactions or dealings with Tornado Cash, you are encouraged to file a licensing request by visiting the following link: https://home.treasury.gov/policy-issues/financial-sanctions/ofac-license-application-page.
Additionally, OFAC is aware that certain U.S. persons may have been dusting victims and received unsolicited and nominal amounts of virtual currency or other virtual assets from Tornado Cash. OFAC advises that its sanctions regulations do apply to dusting transactions and should be blocked and reported to OFAC within 10 days. To file a report, complete the form available at this link and email to OFAC’s Sanctions Compliance and Evaluation Division at [email protected].
We’ve previously written about protecting yourself from dusting attacks.
SALT Blockchain Inc., SALT Lending LLC, SALT Platform LLC and its employees operate in compliance with all applicable U.S. federal and state laws, including with respect to laws governing money laundering and anti-terrorism. SALT reserves the right to decline to open an account if, after conducting its compliance review, SALT determines it risks noncompliance with money laundering and anti-terrorism requirements.