OFAC clarifies definition of designated ‘Tornado Cash person’

The US Treasury Department’s Office of Foreign Assets Control (‘OFAC’) has attempted to give clarity to its 8 August designation of the Tornado Cash virtual currency mixer, which it said, had been used to launder ‘more than $7 billion worth of virtual currency since its creation in 2019.’

In an 8 November FAQ, OFAC answered the question as to who the Tornado Cash person was that it had designated, thus:

‘A “person” subject to designation under E.O. 13722 or E.O. 13694, as amended, includes an individual or an entity, defined as “a partnership, association, trust, joint venture, corporation, group, subgroup, or other organization.” Once OFAC has determined that a person is subject to sanctions, OFAC adds that person to the Specially Designated Nationals and Blocked Persons List.

‘OFAC designated the entity known as Tornado Cash, which is a “partnership, association, joint venture, corporation, group, subgroup, or other organization” that may be designated pursuant to IEEPA [The International Emergency Economic Powers Act]. Tornado Cash’s organizational structure consists of: (1) its founders and other associated developers, who together launched the Tornado Cash mixing service, developed new Tornado Cash mixing service features, created the Tornado Cash Decentralized Autonomous Organization (DAO), and actively promoted the platform’s popularity in an attempt to increase its user base; and (2) the Tornado Cash DAO, which is responsible for voting on and implementing new features created by the developers.  

‘Tornado Cash uses computer code known as “smart contracts” to implement its governance structure, provide mixing services, offer financial incentives for users, increase its user base, and facilitate the financial gain of its users and developers. OFAC has not designated Tornado Cash’s individual founders, developers, members of the DAO, or users, or other persons involved in supporting Tornado Cash at this time. However, all Tornado Cash property and interests in property are blocked, and U.S. persons cannot transact with Tornado Cash or deal in its property and interests in property, absent authorization from OFAC.’

https://home.treasury.gov/policy-issues/financial-sanctions/faqs/added/2022-11-08