united-states finance cryptocurrency sanctions
What are the consequences of being party to a OFAC prohibited transaction?
<p>The US Treasury <a href="https://home.treasury.gov/news/press-releases/jy0916" rel="nofollow noreferrer">has sanctioned</a> Tornado Cash which is a tool for mixing Cryptocurrency. Since the sanctions don't actually stop this tool from working someone has used it to <a href="https://blog.chainalysis.com/reports/tornado-cash-ofac-sanction-trolls/" rel="nofollow noreferrer">send small amounts of funds to various celebrities</a>. In my understanding these qualify as prohibited transactions as defined by the US treasury which US persons are forbidden from engaging in.</p>
<p>For those recipients that are US persons, what are the consequences? Do they have to report those funds? Could they get in any trouble if they just ignore this? Or if they spend those funds?</p>

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<p>Could they get in any trouble if they just ignore this?</p>
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<p>Generally, a gift is not complete until both the donor and the recipient consent to it. If someone purports to give crypto-currency to someone they have no relationship with, and the recipient does not accept the gift, the transaction is not completed and the recipient is not exposed to civil or criminal liability.</p>
<p>A person who completely ignored a purported transfer of crypto-currency to them would not have taken acts sufficient to count as acceptance of the gift.</p>
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<p>Or if they spend those funds?</p>
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<p>Most sanctions and crimes require the person sanctioned to have some knowledge of the facts that make their actions crimes or subject to sanction.</p>
<p>Ignorance of the law is no excuse, but if the person receiving a small amount of crypto-currency has no knowledge&lt;1&gt; of the facts that would make the transaction a prohibited transaction, this won't generally give rise to sanctions or criminal penalties.</p>
<p>&lt;1&gt; Note that, in some circumstances, if there are facts that don't give you actual knowledge of the relevant facts that would let you know that conduct was illegal, but do alert you to the fact that the transaction is suspicious, if a further reasonable investigation of the facts would have revealed that the transaction was illegal, you have &quot;inquiry notice&quot; of the facts. When you have inquiry notice of the facts, you are treated as if you knew what you would have discovered if you'd follow up to investigate the suspicious circumstances.</p>
<p>On the other hand, if someone received crypto-currency and spent it, and then didn't check the box on their tax return asking if they had engaged in any crypto-currency transactions, they would be guilty of intentionally filing an inaccurate tax return and could be sanctioned for that.</p>
<p>Of course, if the person who received the funds was aware of the entire Tornado Cash situation and knew the facts that would make accepting it and spending it a prohibited transaction (before spending it), then they could be sanctioned.</p>
