OFAC's Redesignation of Tornado Cash May Reinforce Legal Standing, Report Says
The Office of Foreign Asset Control’s redesignation of Tornado Cash last week (see 2211080050) may have been aimed at bolstering the agency’s legal standing against the virtual currency mixer, according to a Nov. 9 report from MoneyLaundering.com, a news site operated by the Association of Certified Anti-Money Laundering Specialists.
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“OFAC did not take all of the complications into account when it did the first designation,” Peter Piatetsky, a former policy adviser for OFAC, told the news site. Piatetsky said replacing the sanctions designation “may put the action on firmer legal ground” and could force lawsuits against the original designation to be revised.
OFAC said it redesignated Tornado Cash to account for its “role in enabling malicious cyber activities,” and the designation now references an additional sanctions authority related to North Korea. “Now they have double legal authorities rather than just one, which may have been more wobbly,” trade lawyer Douglas Jacobson told the news site.
Yaya Fanusie, a former CIA analyst who now heads a consulting firm, said in an analysis published last week that the redesignation was “a challenge, daring industry to consider if it really wants to dig in its heels and defend an entity that allowed North Korea to move half a billion dollars of illicit funds.”