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Taken from http://cyber.law.harvard.edu/openlaw/DVD/1201.html#b as linked in the FAQ at http://www.chillingeffects.org:

"(b) Additional Violations. -

  •  
    • (A) is primarily designed or produced for the purpose of circumventing protection afforded by a technological measure that effectively protects a right of a copyright owner under this title in a work or a portion thereof;
    • (B) has only limited commercially significant purpose or use other than to circumvent protection afforded by a technological measure that effectively protects a right of a copyright owner under this title in a work or a portion thereof; or
    • (C) is marketed by that person or another acting in concert with that person with that person's knowledge for use in circumventing protection afforded by a technological measure that effectively protects a right of a copyright owner under this title in a work or a portion thereof.
  • (1) No person shall manufacture, import, offer to the public, provide, or otherwise traffic in any technology, product, service, device, component, or part thereof, that -
  • (2) As used in this subsection -
    • (A) to ''circumvent protection afforded by a technological measure'' means avoiding, bypassing, removing, deactivating, or otherwise impairing a technological measure; and
    • (B) a technological measure ''effectively protects a right of a copyright owner under this title'' if the measure, in the ordinary course of its operation, prevents, restricts, or otherwise limits the exercise of a right of a copyright owner under this title."

The key is part of the PS3's technological protection measure. This part is used soley for the circumvention of this technological protection measure. Geohot "offered" this part to the public.