Breaking a month-long silence since banning Ethereum coin-mixing tool Tornado Cash, the U.S. Treasury Department on Tuesday announced a path for Tornado Cash users to recover funds, and also addressed other pressing questions about the implications of its sanctions.

The Treasury Department’s move to ban Tornado Cash in August sent the crypto community into a frenzy over privacy and government oversight, and left many wondering whether their everyday crypto activity could lead to criminal charges. 

The Treasury's Office of Foreign Asset Control (OFAC) argued at the time that Tornado Cash facilitated money laundering and terrorism.

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OFAC will provide an avenue for Tornado Cash users to legally withdraw deposited funds from the now-blacklisted platform, according to a Tuesday update to the “frequently asked questions” portion of its website. 

Individuals who deposited funds into Tornado Cash prior to August 8—the date the Treasury banned American citizens from interacting with the toolwill now be able to request a special license from OFAC that, if granted, would allow them to access and withdraw the funds.

“OFAC would have a favorable licensing policy towards such applications, provided that the transaction did not involve other sanctionable conduct,” the Treasury noted today.

In addition, according to the updated website, individuals who have been nonconsensually sent small amounts of Tornado-cash affiliated funds will likely not be at risk of criminal prosecution. 

OFAC’s sanctions on Tornado Cash also blacklisted a number of wallet addresses associated with the tool. Interacting with those addresses in any manner is theoretically tantamount to conducting business with a hostile government or terrorist organization. In the days following the sanctions, an anonymous Tornado Cash user trolled a number of celebrities, including Jimmy Fallon and Logan Paul, by “dusting” them—sending them small amounts of funds and therefore potentially exposing them to criminal liability. 

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The government announced today that it will “not prioritize enforcement” against individuals, like those celebrities, who “have received unsolicited and nominal amounts” of virtual currency from Tornado Cash. 

Such a position, though, leaves much in the air. 

What amount of cryptocurrency the Treasury would consider “nominal” in this context was not clarified. Further, how the Treasury will be able to effectively assess which transactions with these blacklisted addresses are genuinely unsolicited, and which are not, remains unclear. 

The Treasury also stated that while it remains illegal for an American citizen to conduct any transactions with Tornado Cash, disseminating information about the tool itself—including its underlying open-source code—is legal. 

In the hours following the Treasury’s announcement of sanctions against Tornado Cash in early August, software development platform Github, which is owned by Microsoft, removed Tornado Cash’s open source code from its website as a precautionary measure.

Since then, numerous individuals—including a Johns Hopkins professor—have taken steps to publicly preserve Tornado Cash’s underlying code, to fight back against the prospect that the U.S. government, in banning a service, was also “ban[ning] source code distribution and scientific speech.”

“Interacting with open-source code itself, in a way that does not involve a prohibited transaction with Tornado Cash, is not prohibited,” the Treasury stated today. “U.S. persons would not be prohibited by U.S. sanctions regulations from copying the open-source code and making it available online for others to view, as well as discussing, teaching about, or including open-source code in written publications, such as textbooks, absent additional facts.”

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The stance marks a departure from those taken by other nations, including the Netherlands, which argued that the act of writing code alone for an instrument such as Tornado Cash “may be punishable” if the code is designed “for the sole purpose of committing criminal acts.”

Days after the Treasury’s sanctions on Tornado Cash, the Dutch government arrested 29-year-old developer Alexey Pertsev in connection with Tornado Cash. He remains in custody.

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