This is just like the SEC "not enforcing" securities clauses until they have evidence. I think the writing is on the wall for not just Tornado Cash, but any system that functions like it: if you don't have an AML system that works, and your system is used for anything the government can prove would've been stopped by AML and should have been stopped by AML, it is incompatible, in principle, with the US dollar.
Just because Tornado Cash and other mixers survived for this long doesn't mean that the law suddenly changed or anything. All it means is that there was enough evidence collected to justify OFAC/SDN sanctioning. Then, the dominoes fell.
Tornado Cash was /never/ okay, but the government waited patiently for the evidence and acted when it had it. The same thing should be assumed to be true for /all/ systems in this sphere. The US dollar is the world reserve currency, and the SDN list is a death sentence for any project or system if that system has outputs to US dollars anywhere in the chain. All electronic cash transfer systems should be assumed to be incompatible unless there's a clear AML chain established that can reasonably defend against a blanket sanction.
In the exact same way, the SEC will go after any cryptocurrency "securities" that they want to, as soon as those securities blow up. Filecoin had an ICO just like a lot of other securities, but seemingly because it hasn't blown up, the SEC hasn't come knocking yet. It's just an evidence collection game.
> if you don't have an AML system that works, and your system is used for anything the government can prove would've been stopped by AML and should have been stopped by AML, it is incompatible, in principle, with the US dollar
Yeah, and I think it's really interesting how widely accepted this stuff is. I mean, it's literally the financial version of global mass surveillance. Governments gotta know every single transaction that's ever happened because reasons, and if anything bad happens and it turns out someone's lack of total surveillance and record keeping of everyone they ever dealt with somehow helped it happen, well...
Sometimes it feels like people don't realize how tyrannical and dystopian that is. Like money laundering is some unbelievably evil crime that makes it okay for the government to surveil everything in hopes of stopping it.
Money laundering is evil. Sorry, this weird obsession people have with "Muh financial privacy" and "I'm just moving it around, that ain't a crime!" is the outlier here.
Should the government be handed every transaction on a silver platter every day? Probably not, but I don't think you'll find many people in the big wide world agreeing that financial activity should be forever unavailable to governments, courts or anything else, even under applicable warrant, which is what these services provide.
And why is this absolute privacy bad? Where to start? Criminals hiding ill-gotten gains is only a small part of it. We have the funding of rogue nation states and enabling of ransomware, which is roughly in the same ballpark, sure, but very harmful. Then we have straight-out tax evasion. We also have dictators and despots who plunder their countries and enrich themselves. Should their activities be private? Should we just allow them to siphon money off to other countries and live the high life while their population suffer? It happens all too often already, but in much of the west now we are catching this stuff and denying them those things because we can see some of what's gone on.
And what about our own democracy? Absolute financial privacy can allow wealthy interests to brazenly buy politicians, with guarantees of untraceability.
So no, I don't "realise" how tyrannical and dystopian that is, in fact to me it looks like it helps prevent a variety of forms of dystopia, in which the rich and the corrupt could even more easily and directly buy democracy out from under us.
The fact that you can't currently have a system which provides privacy until an authority (such as the court system) demand things be unlocked, well that seems like a problem for cryptocurrency users, not the law.
Be careful that you do not become even worse in the attempt to fight it.
We are all engaged in a politico-technological arms race: government makes laws, people make technology that circumvents them. They must create ever more tyrannical rules in order to stop the latest technology. So what is your limit? How far will this loop continue until either criminals win or people are crushed under a totalitarian government?
> Should their activities be private? Should we just allow them to siphon money off to other countries and live the high life while their population suffer?
Should governments warrantlessly surveil everyone to prevent such things? Corrupt people getting rich off of taxpayer money sucks but I wouldn't trade away my privacy in order to prevent it.
> The fact that you can't currently have a system which provides privacy until an authority (such as the court system) demand things be unlocked
Yes, because governments, especially the USA, are notorious for respecting the rights of their own citizens not to be surveilled without reason. Right?
> So what is your limit? How far will this loop continue until either criminals win or people are crushed under a totalitarian government?
Not only is this not my 'limit', I view the incident we are talking about as a very positive move. Traditional finance laws should be enforced in the cryptocurrency space. "But blockchain" is not a good answer to why you shouldn't have to.
They aren't even creating any more rules here! They're literally applying the exact same rules that are already applied to everyone else in every other avenue. If cryptocurrency systems can't play by those rules, then that's a cryptocurrency ecosystem problem.
> Should governments warrantlessly surveil everyone to prevent such things?
You'll note I already explicitly said no to that in the comment you're replying to. You then go on to talk about "muh privacy" in absolute terms as well. This black/white, all/nothing view of the world is part of the problem. I don't think government should be surveilling everyone all the time by default, nor do I think that we should be enabling completely untraceable large-scale money-laundering facilities that can't even be examined under appropriate warrants. There is an entire spectrum of shades of grey between those two. It may even be multi-dimensional, and the entire 'mainstream' financial system lives in there. Presenting it as only one or the other is fallacious. If blockchain systems can't support any sort of middle ground then again, that's a cryptocurrency ecosystem problem.
> Yes, because governments...
You're making the case for democratic reform here, which I am all for. Democratic reform and democratic oversight. Sounds good.
> completely untraceable large-scale money-laundering facilities that can't even be examined under appropriate warrants
It's just private digital currency. If they suspect someone is laundering money, they should have to seek real warrants and then knock on actual doors. They shouldn't be able to just put the burden on corporations and citizens to do the mass surveillance for them so they can prove to the government that they're not criminals up to no good with their hard earned money.
Privacy is a reasonable expectation and these currencies are the tool to achieve it. They aren't to blame when some criminal uses them to do whatever. Are you against citizens having access to cryptography the state can't break as well? Because that's the standard by which these technologies are judged.
> You're making the case for democratic reform here, which I am all for. Democratic reform and democratic oversight. Sounds good.
Sounds great but until such a thing happens there is no reason to trust these governments.
The corrupt buying democracy out from under us? It's already happening, it's not even hidden and money laundering laws don't stop anything. We have these billion dollar corporations lobbying the US government, essentially buying laws that favor them. Copyright industry robbed the people of their public domain rights and these traditional laws didn't do a thing to stop it.
> They shouldn't be able to just put the burden on corporations and citizens
But 'they' already do put this compliance burden on citizens and businesses in all other avenues of finance. There is nothing new here, and as I said before "but Blockchain" is not a good enough reason to exempt sections of the industry from this.
> Privacy is a reasonable expectation
Sure, to some extent, but absolute, mathematical privacy even in the face of court orders? Really not so much. Yeah, we can agree that 'they' should have to get warrants for a lot of this stuff, but services like Tornado make it impossible to execute said warrants, they do a complete end run around legal, legit access to this information. Which is why we as a society seek to stop those sorts of services from running in the first place. Like I've been at pains to say in my other comments here: there is an absolute fuck-ton of middle ground between complete financial transparency and complete, mathematical financial opacity.
> Are you against citizens having access to cryptography the state can't break as well?
No, because fundamentally speech and finance are not equivalent.
The fact that you can use cryptography to permanently obscure financial transactions doesn't mean that we should just allow that to happen in the name of privacy, privacy of a degree which we explicitly don't afford to actors outside of the cryptocurrency space. Encrypted comms - great, services using cryptography to facilitate money-laundering, not so much. There is no inconsistency here. Lots of finance houses use all sorts of fancy crypto to keep their stuff secure, but they also keep compliance records so that if the courts do come knocking with the appropriate legal rights to data, they can deliver it. I know this goes massively against the ruling ethos in cryptocurrency circles, and a lot of cipherpunk type mentality, and that's really why we're seeing this stuff escalate, because as more and more people try to take ETH/BTC/whatever mainstream, the more it buts up against the existing system and the more the regulators take notice.
> The corrupt buying democracy out from under us? It's already happening, it's not even hidden and money laundering laws don't stop anything.
It is happening, but I disagree, money laundering and oversight laws catch a bunch of stuff, there have been multiple stories of (for instance) Dictators' wives being caught buying expensive property with dirty cash in Western nations, then being denied access to their accounts.
I agree, lobbying in the US needs serious attention. I don't think Tornado Cash is going to fix that, in fact widespread use of such services is almost guaranteed to make it much, much worse, especially in countries where we already restrict lobbying much more!
Something of an aside, but your comment here seems largely well-written, reasonable and a positive contribution to the community, but the usage of "muh privacy" really, really harms it. It makes an otherwise sound argument come off as childish and rude and is derogatory towards people who have slightly different priorities or views.
I guess I'm just tired of this argument, and how much the internet is full of polarised, false-dichotomised thinking, and has been for decades.
I'm not going to claim to have never argued in such a manner myself, or that my phrasing is particularly helpful. I also just need to take some time off work.
I'm an illustrator. I want to make some pin-up art and sell it. However
A. I think it's kind of embarrassing
B. It could absolutely never be associated with my real name because it would torpedo my official career due to the current social climate.
The only way I could think of to really keep identity separation in a way that doesn't leave me beholden to a third party was to use some sort of crypto mixer. I don't trust institutions not to leak data that could be used to establish an identity link.
Question: how do you propose preventing other people from making copies of this art and selling it, without revealing your identity?
If you want to use copyright to protect your work, and end up suing, remaining pseudonymous will be difficult.
Courts will only sometimes allow an anonymous/pseudonymous complaint. Even when they do allow it, they may require that defendant be given access to your real name, even if it remains sealed from the public. Even if you are somehow successfully in remaining anonymous to the court, the defendant, and the public, you are only going to be able to do that via being represented by an attorney, who will most likely need to know your name, and the attorney’s identity will be public.
(The attorney would likely need to know your real name for ethics reasons, like making sure they are not representing a defendant you are suing in some non-private lawsuit. )
But given you don’t trust institutions to not leak identity, I suppose you cannot trust the attorney to either.
I won't bother with copyright. It's already mostly impossible anyway. If you make illustrations these days you can't prevent their distribution. Only situation worth bothering with copyright is if a major company/high paid illustrator lifts your work, and even then it's tenuous (look up "sail lin call of duty floof").
The way to make money as an independent is to make distinct/unique content people can immediately recognize as yours and open up donations (patreon). You can also time gate access to new work to some extent. If there's a better model, I'm unaware.
Copyright disproportionately protects large firms, not individual creators. There are exceptions, of course, but they are far from the norm. Hell, most big companies I've worked at have clauses that say I assign them all rights to all work I make while employed with them. Those are fun to deal with.
Short of massive success, I would be better off as an illustrator if copyright were entirely dismantled.
I trust attorneys on a case-by-case basis. So far the ones financially aligned with me have been swell.
I think you're likely overly paranoid, not evil. And I also think you probably ought to consider what else it is you're giving cover to by using a mixer, and not be surprised if the services you use get shut down with great prejudice.
I disagree. My livelihood depends on said identity separation. I agree such a leak is very unlikely, but it could be life-changingly detrimental if it happened. Or it could raise public opinion of me, who knows? I believe in risk management.
>consider what else it is you're giving cover to
I can see it that way. But I mostly transact in the US dollar, and voluntarily live in the US. Do I therefore support the US goodbye-kiss dronestrike on an innocent Afghani family?
IMO participating in a system of commerce does not necessarily confer the responsibilities of some participants onto others.
Money laundering is not evil. Anti money-laundering laws are evil.
There shouldn’t even be a need to launder money, no matter how one came in possession of it. Otherwise the burden of proof is inversed, where I have to prove to basically the preponderence of evidence standard to virtually all financial institutions that my money is not proceeds of some illegal activity.
Anti-money laundering laws just add more crimes on top of the illegal activity in the first place, presumably because of lazy job by the politicians caused by lazy investigators, because evidently it’s easier to prove the money laundering fact, than the underlying criminal activity. Which is the same reason why we have civil asset fortfeiture, which, quite literally, is nothing more than legalized theft.
> Then we have straight-out tax evasion.
Kudos to whoever manages to get away with straight up tax evasion. Taxation is inherently violent.
> And what about our own democracy? Absolute financial privacy can allow wealthy interests to brazenly buy politicians, with guarantees of untraceability.
In that case, the politicians have too much power.
Let's assume we're talking about tax evasion: the government is telling its citizens "Give me 50% of your profit or I'll put you in jail". This is violence and it's immoral. Escaping this violence is not a crime in my book.
Let's assume we're talking about trafficking illicit substances: the government is telling its citizens "Don't trade these items with each other or I'll put you in jail". This is violence and it's immoral. Escaping this violence is not a crime in my book.
Let's assume we're talking about people corrupting politicians: this is immoral but, on top of often going unpunished in the current system - it's unfixable. The only way to reduce this occurrence is by reducing (or entirely eliminating) the power centralised in the hands of politicians so that no-one will want to corrupt them. No need to monitor all financial transactions.
Let's assume we're talking about people killing other people: this is obviously immoral. Still, pick any "legal" war initiated by government and you'll find more dead innocents than what crime cause. Are we preventing money transactions to maintain our army? And then, is tracking this ill gotten gains an efficient way of improving the situation? I think it will be largely ineffective, it's much easier to foster a society where we have private protection services that work, instead of an inefficient police force collecting a paycheck from the taxpayers regardless of performance.
When you wield an hammer everything looks like a nail - but monitoring citizens like in 1984 is a inefficient solution meant to fix symptoms of bigger problems: namely our centralisation and dependance on a central government, their monopoly to violence and their obsession with regulating our lives, certainly "for our own good" and not to exercise and maintain their power.
> Let's assume we're talking about tax evasion: the government is telling its citizens "Give me 50% of your profit or I'll put you in jail". This is violence and it's immoral.
I could just as well say "hoarding resources and not sharing them with the rest of society, just because you're able to, deprives others. This is violence and immoral." That's not necessarily my personal view, but do you see how morals can differ?
> Escaping this violence is not a crime in my book.
The key concept there being that it's "your" book. Laws are not objective and absolute, they're the result of the society they exist in, preferably (in my and most people's opinion) derived from democratic participation. Your book is not aligned with the laws of the country you live in. You can lobby to change that, but it does not mean that the laws are invalid or shouldn't apply.
All taxation is theft and what's more that makes it violence! I am the ultimate authority in my life, you can't tell me what to do! Governments suck because war is bad! I don't need regulations at all!
This is so full of fallacious assumptions and facile ancap thinking it's hilarious.
The real world is filled with forces that want to crush you. The government creates an alternative reality game with law and order to isolate you from the harshness of reality.
If you complain about the only source of violence to you being the government, then congratulations the system is working for you. Some poor, especially black people think the opposite, that their government has abandoned them and left them exposed to both violence by fellow people and authorities who abuse their powers. What do they want? To be treated like their rich or white fellow citizens.
I don’t even know how to respond to this sort of caveman “it evil” thinking but..
> funding of rogue nation states
Rogue according to you?
> straight-out tax evasion
Avoiding the violent theft of your hard earned money is now evil?
> We also have dictators and despots who plunder their countries and enrich themselves. Should their activities be private?
Their money should be. Store of value should be.
> Should we just allow them to siphon money off to other countries and live the high life while their population suffer?
This is a question that has very little to do with whether money is private. Inequality is not impossible to detect even if money is private.
> And what about our own democracy? Absolute financial privacy can allow wealthy interests to brazenly buy politicians, with guarantees of untraceability.
They don’t even need privacy. They do it in broad daylight.
> Tornado Cash was /never/ okay, but the government waited patiently for the evidence and acted when it had it.
The government didn't even sanction all the smart contracts. BSC chain had more activity than the Ethereum contract, but they didn't seem to know about it. Furthermore, Tornado had compliance tools built in that allows users to prove where their funds came from to make themselves compliant with KYC rules.
I don't think the government really thought it through, and future lawsuits will hopefully result in Tornado being un-sanctioned and privacy affirmed as a constitutional right, as it did in the 90s when source code was declared free speech after a long battle https://en.wikipedia.org/wiki/Bernstein_v._United_States
Tornado Cash was sanctioned over e.g. Monero, ZCash or Secret Network that fulfill the same shieled transaction purpose but have existed longer. The reason for this was that Tornado Cash attracted North Korean Lazarus group to use it. The reason why Lazarus used it was that it was non-custodial (no risk of criminals stealing other criminals) and ETH had better exit liquidity over XMR and ZCash that are not often listed on the shady exchanges. When national security interest card is played, laws and even the constitution do not seem to weight so much anymore in the US.
If Tornado Cash had been modified in a way that it could not allow easily to deposit and withdraw large amounts by limiting flow/liquidity it would have been less attractive for Lazarus and other hack group purposes. For example, Harmony One hack $100M was pushed through Tornado in one day.
Tornado Cash has a compliance tool that could allow centralised exchanges and fiat off ramps to trace transcations through Tornado. However, in practice some US political allies, like those in Dubai, run shady OTC desks that do not do it, making Tornado very practical tool for hack laundering.
The best outcome for the situation would be
- Tornado Cash code is ”unsanctioned” or deemed free speech
- Someone builds a service for shielded transactions that has features to discourage its use for nation state scale money laundering
Ransomware groups have been using Monero and Bitcoin as well, it isn't like Tornado was a unique player. I seriously doubt that with Tornado banned suddenly money laundering and hacking will stop. If anything it will make regulators' life harder as it will all now disperse into other tools rather being centralized into a single place, and hardcore cypherpunks will be more motivated to build even better tools.
Earlier in May Bitcoin mixer blender.io was sanctioned for the same reason. While hacking and money laundering does not stop, small steps can be made to limit the exit liquidity for ransomware/scam/hack/phishing even without drastic KYC/AML/FATF travel rule measurement.
Because the alternative is that the regulators attempt compliance theater and you need to scan your passport every time you do a transaction and then your identity information is being stolen left and right.
The argument you're likely to get is something along the lines of "just because the rules don't stop everybody, that's not an argument not to have the rules."
But you're right. In this case it won't do much. But it justifies the salary of many bureaucrats. They can play whack-a-mole and no one will think too hard about it, because hey it's hardened criminals they're going after right? The 'moles' will simply scatter elsewhere and those arguing to whack the moles will always have the moral upperhand, so the salaries of the mole whackers will always be secure.
It is more like a random audit than whack-a-mole. It will scare off a huge amount of small time players with lives they don't want ruined that had thought they could use it to tax dodge. Maybe they still can, but now they have a chance of random audit hanging over their head.
> The whole thing seems really hamfisted and poorly thought out. The US Secretary of State even tweeted incorrectly that North Korea built Tornado, then had to delete the tweet!
Somewhat tangentially, if it is an official government account, it's crazy to me that they can get away with deleting tweets (and subsequent interactions on those tweets) without an official record.
I can see valid reasons to delete a inaccurate and misleading statement, but this requires substitution with a link to the archived message and a public statutory countdown to a seven days grace period before any misleading public servant either publishes a formal explanation for their errant communication or is automatically forfeit the mechanism of their office. Possibly the forfeit could be incrementally enforced for graded infractions, but given the gaming culture in every reach of human responsibility I think it should be a simple and clear cut off.
This feels like another version of the 90s cryptowars - a lot of the arguments are similar. Encryption enabled regular people to have private communications, but at the cost of bad people also having private communications.
Tornado cash allows regular people to have private blockchain transactions on ethereum (where with blockchain everything is extremely public otherwise), but at the cost that bad people can also have privacy.
Sanctioning tornado addresses is similar to the export munitions thing with crypto and keys, particularly weird since tornado seemed to go out of their way to build in compliance tooling? IANAL, but there's some strong precedence for speech protections with regard to code.
I have no interest in helping the people trying to evade taxes (at least they’re not the group I care about), I care about the people that want private transactions and pay their taxes.
There are good reasons to want privacy around financial transactions that are not tax evasion or money laundering. This is especially true in the blockchain world where everything is extremely public.
Just like there are good reasons to want private communication even if you're not committing crimes.
A lot of people in Greece simply didn't pay taxes because they could easily get away with it. It might be okay if a few people do it, but if everyone does it, it destabilises the country and the damage will go beyond politicians losing their seats.
> A lot of people in Greece simply didn't pay taxes because they could easily get away with it. It might be okay if a few people do it, but if everyone does it, it destabilises the country and the damage will go beyond politicians losing their seats.
No. It's deeply rooted in Greek culture to the point that VAT is basically an optional tax for most entrepreneurs. Virtually nobody at all pays VAT on cash sales in Greece, and there's virtually no enforcement on it, so the only risk of getting caught is if you've pissed off someone with connections.
So everyone does it, and Greece is reasonably stable.
It's interesting how Tornado Cash was sanctioned and not Monero. Perhaps there was more evidence of Tornado Cash being linked to criminal activity, which seems counterintuitive because of how much more popular Monero is. Is it perhaps easier to trace transactions on Tornado Cash?
My guess is that it’s both: the Dutch story specifically mentioned direct personal profit, which I’d bet GitHub knew about, and if the story about North Korea using it to launder the proceeds from high-profile hacks are true that’d certainly explain the specificity as not picking one option out of many but rather the one which came up in the process of a big investigation. Half a billion dollars is enough to attract all kinds of attention – I’m sure Monero would get a similar reaction if the Lazarus group was traced to that network, too.
What this suggests to me is that these services are about to mostly go underground as primarily criminal organizations’ internal services. It’s like running a Tor exit node but worse due to the liquidity requirements: you have to be an incredibly privacy-minded activity with a huge sense of security to link yourself financially to a service which you know will inevitably be used by one of these groups.
> Is it perhaps easier to trace transactions on Tornado Cash?
An exchange can detect if some Ethereum have been through a mixer very easily.
Monero on the other hand has been de-listed or banned from exchanges, making it harder for criminals, scammers, etc to cash out or swapping to fiat.
As soon as the Tornado contract address has been blacklisted and put on the sanctions list, any wallet address interacting with the contract or Ethereum sent from or to it will flag up and get blacklisted by other centralized entities that have AML/KYC checks like Circle USDC, many exchanges, etc.
Why did you leave out the fact that Kraken [0] delisted it in the UK, Bittrex also delisting it [1] and many [2] other exchanges [3] also delisting it? Even Litecoin has been delisted [4] due to a privacy feature upgrade and even Binance [5] is not supporting the Litecoin privacy extensions upgrade.
There is a reason why FTX, Coinbase and Binance.US never listed it in the first place and this reinforces my point that regulators do not want privacy coins to survive.
I'm told that detecting if a transaction will involve the tornado contract is similar to the halting problem, because someone can write a proxy contract that behaves one way while being checked and another way when being executed. They can catch the easy cases, but it is impossible to detect all prior.
no, it's all in software because you can create any smart contract and it can call any other. There is a difference in knowing after the transaction has finalized and predicting beforehand, which is when you would want to block the transaction.
> In the exact same way, the SEC will go after any cryptocurrency "securities" that they want to, as soon as those securities blow up. Filecoin had an ICO just like a lot of other securities, but seemingly because it hasn't blown up, the SEC hasn't come knocking yet. It's just an evidence collection game.
When did XRP blow up? I don't think the SEC is waiting for a rug pull or system failure to sue.
> The US dollar is the world reserve currency, and the SDN list is a death sentence for any project or system if that system has outputs to US dollars anywhere in the chain.
If that's so, why not to after the entities that actually convert X into USD? Tornado only allowed you to trade ETH for Tornado tokens, and vice-versa, no USD involved.
I’m not sure if you’re being obtuse, but exchanges are already subject to AML/KYC, and are constantly both enforcing as much as they can, or being fined by governments for failing to do so. Tornado was the exception until now.
This is true of a lot of tech start ups - doing something that is technically not allowed, but the key difference is that to do it successfully you need to get to a scale where you can pivot to something is allowed. For Uber that was slowly changing to adhere to all the regulations around employment law and taxi companies in each jurisdiction. It's questionable that after that pivot they're a great business.
In Tornado Cash I guess the equivalent would "You can hide the flow of your crypto from the public but we're still going to comply with the government AML & KYC."
> All electronic cash transfer systems should be assumed to be incompatible unless there's a clear AML chain established that can reasonably defend against a blanket sanction.
Nonsense absolutism.
Is that why Stripe, Moneygram, Circle, etc invested in Stellar, and they are still using ISO 20020 compliant cryptocurrencies like those ones after waiting for regulatory clarity in March 2022?
If you're referring to ISO20022 that's a messaging standard primarily used between financial institutions, not an AML compliance thing. It's got nothing to do with regulation at all, let alone AML regulations. That's kind of like saying companies that run SMTP servers must therefore be in compliance with GDPR or email archiving laws.
As for why Moneygram invested in Stellar who knows? CDPQ invested in Celsius. Better to ask forgiveness than permission, but as the parent said, lack of enforcement does not mean lack of regulation - and it has no bearing on future enforcement.
Financial services companies take AML compliance seriously because if they don't their liability is practically unbounded and I have to say Moneygram looks nothing like Tornado.
> As for why Moneygram invested in Stellar who knows?
Moneygram knows? Maybe try asking them and others on why they did?
I'm very sure that Moneygram had a wide range choices of other projects to build their product but somehow landed with one serious crypto project that happens to be compatible with the ISO 20022 messaging standard which the current system is using and the Stellar Network has stood the test of time since their launch.
Didn't stop them from actually launching the product with the Stellar Network and for Stripe investing in the project and waiting for regulatory clarity in March 2022 to announce their cryptocurrency services did it?
> Moneygram knows? Maybe try asking them and others on why they did?
Why would I ask them? They would never admit to it being a 'shoot first ask question later' play. They would never admit to it being FOMO. They would never admit to it being something they were afraid they'd get left behind on and once they realized it wasn't relevant to their business, sunk cost fallacy took over. They'd never admit to anything that made them look bad. You wouldn't ask Moneygram for the same reason you don't take a criminal's word on not doing crime - there's only downside to telling the truth. I'm not saying it's one of these reasons - but rather if it was they'd never say.
Again, ISO 20022 is completely irrelevant to this conversation. I've genuinely no idea how this became a talking point.
Again, this has nothing to do with AML compliance which I'm confident each of those companies do - and we know full well that Tornado did not.
Again, there's no reason to think that there won't be any future regulatory action simply because there has not yet been any, and I personally doubt any amount of appealing to authority will help.
> Why would I ask them? They would never admit to it being a 'shoot first ask question later' play. They would never admit to it being FOMO. They would never admit to it being something they were afraid they'd get left behind on and once they realized it wasn't relevant to their business, sunk cost fallacy took over. They'd never admit to anything that made them look bad.
Is this what you say when someone brings up a refutation towards an absolutist statement about "AML chains" and standards compliance with the current system? Why not confirm your suspicions by asking them directly [0] rather than making more excuses, unless as I always expect from many absolutist critics of crypto especially on this site, that they are all talk and no action; which that is so easy, anyone can do that.
> Again, ISO 20022 is completely irrelevant to this conversation. I've genuinely no idea how this became a talking point.
The reality is and with the many years of these cryptocurrency technologies and projects existing is that only a few of them will survive and as I have mentioned already a few will stand the test of time to be serious enough for companies like Stripe and Moneygram to choose and use projects like Stellar, and those that are compliant with the current system; be it the ISO 20020 messaging standard and have AML compliance, etc will be around for a very long time. So in fact, it is totally relevant to this discussion.
> Again, this has nothing to do with AML compliance which I'm confident each of those companies do - and we know full well that Tornado did not.
Non-compliant projects that enable complete or total obfuscation like Tornado Cash, Monero, etc or any other projects that angers the regulators won't survive and will be targeted and made difficult to use. That also explains why MoneyGram ruled out the privacy coins and chose Stellar for their product. No need to ask them about that.
> Again, there's no reason to think that there won't be any future regulatory action simply because there has not yet been any and I personally doubt any amount of appealing to authority will help.
Now who exactly said that there won't be any 'future regulatory action'?
Given that the SEC is continuously cracking down and enforcing their regulations on many crypto projects this year and with other places like the UK, EU countries following up with their own rules, its clear that the privacy coins, tools, etc are the first to be clamped down since they are already incompatible with KYC, AML checks; hence the importance of waiting for regulatory clarity by the authorities which is exactly what I said in the first place had you read my comment.
Sounds like you are ranting in denial. It's not too late to stop them and get them to admit your suspicions of them in 'FOMO', or 'being something they were afraid they'd get left behind on' or 'being attached to sunk cost fallacy' yourself then: [0] plenty of time.
See: Even with plenty of time, you (arcticbull) didn't attend the 'Ask me Anything' session to question them or attempt to stop them with your suspicions.
Like I said, just talk and no actions. Very common with extreme anti-crypto folks here.
You and others are making really good points, it’s a shame you’re downvoted into the grey.
Governments are by and for the citizens. Crypto enthusiasts want to avoid taxes while making profits, because let’s be honest, that’s what Tornado is really about. At best, 1% of traffic is for legitimate services, because you can’t really buy much with crypto except other crypto.
What blockchains enable is yet another class of money laundering. It doesn’t help anyone except the crypto minority, but enables the other bad elements to have another system to use for their corrupt activities. Libertarians in a corrupt classist capitalist society cannot “save” themselves by hiding behind a blockchain - it won’t solve societal ills.
ok - except it is a system-of-systems, not one system. The perfection of one and destruction of all others is specifically designed-OUT for lots of important reasons (see HISTORY). Perfect tax enforcement is not even possible, by their own defined rules. There is no perfect system and real evolution needs to deal with that -- all manner of despots and arch-bureaucrats be dammed.
That's just a complaint, not a realistic proposal for change. The reality is that in the US, there is a broad and stable political consensus in favor of ever stricter AML enforcement. This is perceived as reducing tax evasion, sanctions evasion, terrorism, and organized crime. It may not be 100% effective but it obviously has some effect. Only a small fraction of voters and campaign donors are negatively impacted so there is little political resistance.
The point is the rules already exist and crypto was just deluding themselves into thinking it didn't apply. There is no reason for proposals or other formal rule-making because that step already happened.
For me, nothing more clearly signifies "the death of the hacker in the classic sense" than discussions about removing "dangerous" code from Github.
I'm from an older era, and it's continually bizarre to me that, apparently, nearly the entire collective hive mind of "tech" has forgotten that the point of Free and/or Open Source code is that you can spread it around everywhere and get it from different places.
You can probably find more of that hacker spirit in places that are less mainstream.
Here on this forum, many people see employment in giant multinational corporations as something desirable. Many of them are primarily motivated by compensation. The site itself is affiliated with the tech startup culture, which every single government in the world has long recognized as important to the economy. And which they have tried to support to the best of their ability. In the world we are living in today, tech startups are probably the most conventional way of trying to get rich.
If you are looking for alternative subcultures, you should try something little less conventional.
? it's removed because the US government told Github to do so.
the US government tells lots of people to do lots of things.
it told Phil Zimmerman to stop shipping PGP for a while. Debian and OpenBSD refused to do any crypto work in the US at all for like a decade because of this.
it arrested Dmitry Sklyarov for the crime of angering Adobe.
you're conflating "tech hive mind" with "most big tech companies are based in the US for tax/regulatory/staffing/VC reasons and so the US government will kill things that threaten it's goals".
I'm not talking about the part that the US Government's doing, I'm talking about the way in which "tech oriented* people respond. Back then it was much more "The internet routes around censorship, lets get to work" and today it's just like "Oh no what will we do without this code on Github?"
There have always been "tech oriented" people who were mainstream rule-followers.
There have always been "tech oriented" people who were iconoclastic anarchists.
In the early days, before CS curricula were as widespread and mature as they are now, a lot more people who knew how to program were self-taught, which self-selects for a much more independent type of person. For what I suspect were cultural reasons (but don't have solid data on), they were also much more likely to be the type of person who is on the fringes of society, in the counter-culture, or at least something of a social outcast.
I honestly doubt that the absolute number of anarchist- and libertarian-inclined "tech oriented" people has dropped since the '80s and '90s. It's just that there are now orders of magnitude more people who have some reasonable amount of tech understanding, many of whom are very much part of the mainstream and unwilling to put their comfortable lives at risk just to stick it to the man.
Absolutely right, excellent point. This is one of those things that I logically know to be true and yet doesn't stick with me ... emotionally? Something like that.
I'm mid-40s and I do some side contract work and game/Discord with late-20s/early 30's people and folks will be talking about something annoying or unjust, and I'm completely unjustifiably disappointed that no one ever even thinks to mention "hey, we could skirt the rules and just go full hacker on this."
(Note: no one ever do anything illegal, I'm more talking the sentiment than actually inciting naughtiness)
It's an interesting observation but we're not talking about 'sticking to the man' here. The actual situation is that 'the man' and an obliging publisher is taking publicly published free speech and removing it and blacklisting an author.
You certainly need not be in the "fringe" or a "social outcast" to object to this state of affairs, which seem to infringe on certain god given liberties (or so we were told). In fact many "dead white men" of excellent repute at the time were rather insistent on these rights. So if demanding our rights is now the condition of the "fringe", the inevitable conclusion is that we live in the gestate state of an emerging tyranny.
The courts also ruled abortions were private medial matters. Was there some precedent you wanted to rest that legal right on? or some interpretation of the constitution you wanted to base your argument on?
clearly free speech is not an absolute right in the US, as evidenced by the endless court- and government-sanctioned infringements of it.
so, it's not surprising if another bit is, especially as abstruse as "why can't a company host source code that is enabling money laundering by North Korea"
Well in the case of source code I'd say the protection is pretty strong, considering the courts allowed publication of code that the government considered a munition:
> The Arms Export Control Act and the International Traffic in Arms Regulations (the ITAR regulatory scheme) required Bernstein to submit his ideas about cryptography to the government for review, to register as an arms dealer, and to apply for and obtain from the government a license to publish his ideas. Failure to do so would result in severe civil and criminal penalties.
> ...the Ninth Circuit Court of Appeals ruled that software source code was speech protected by the First Amendment and that the government's regulations preventing its publication were unconstitutional.
Outside of this specific case, private platforms are free to moderate themselves as they wish. There are many other places to host code, including your own server.
Edit: I did a bit of googling and didn't find evidence that the government told GitHub to do this. Please link if you have evidence ty.
Correct, and I suppose what I'm perhaps lamenting is the lack of "Okay, looks like Github is in some ways useless if we want to preserve code freedom, what should we build to fix this?"
Per the register:
"The Register has asked GitHub to clarify its actions or cite the US government order naming these developers as SDNs. We've not heard back."
This implies that they weren't told to do so by the government, but it's all speculation.
> Given that code has been found to be protected free speech, at least in the US, causing its removal from GitHub seems like a clear violation of the constitution. ...
I doubt it very much. It is not a violation of the Constitution for the owner of a website to remove user-generated content. It happens all the time and has never been ruled to be unconstitutional.
> ... Cryptographer Matthew Green noted that, but also pointed out the irony of removing code from a distributed, decentralized revision-control system like Git. ...
GitHub != Git. And GitHub is not decentralized in anywhere close to the sense that Git is. I'm not sure where this author is getting their information from, but seems to be just repeating, uncritically, things said on the internet.
The alledged unconstitutional behavior is not Github removing the code, but the policy (sanction) imposed by the US government that led Github to remove the code. The sanctions are unquestionably subject to constitutional review (although the details of how to apply that review in this case are not clear)
It protects you from going to jail for hosting this code on your own git instance. And GitHub isn't obligated to publish your speech, and you can't use the FA to compel it to do so.
If you could, I'd be getting in line to get my fifteen minutes of airtime on the telly.
So if I host the code on my own server, and accept pull requests and modifications, the government can't force me to take it down right? I think that's the real question people are unsure about. Are the actions by github by their own choice or forced by the sanction?
In this case, maybe not, since the code isn't sanctioned.
In a general case, if you are distributing illegal speech, yes. Strangely enough, the first amendment does not protect me speaking, say, a copyrighted work...
The implication is that the sanction, which caused the removal of the code, is violating free speech. Github doesn't have a choice in removing it if they want to avoid getting sued.
> 4) Sanctioned entity files a First Amendment claim to have the sanction invalidated.
This should instead be "sanctioned entity files a first amendment claim to allow the dummy content to be freely hosted on the internet without punishment
oh this is easy, for Github Inc it chilled their speech as this sanction targeted expression by saying that interacting with the codebase is a sanctions violation.
Github Inc's speech and expression was chilled because they thought they had liability OFAC sanction. Its not clear if they actually did. But they didn't want to find out.
if you want to have a rebuttal about some other scenario that you think would qualify as chilled speech, that scenario probably does and should also be challenged
have you ever noticed how legal analogies online often have fundamental flaws?
the first amendment to the constitution does not modify the original constitution, specifically article 1 section 8 of the constitution where by Congress has the power to enact laws to “promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries"
> have you ever noticed how legal analogies online often have fundamental flaws?
Yes, they do, and none have more flaws than people trying to equate <speech plus behaviour that is not speech> with <speech>.
> the first amendment to the constitution does not modify the original constitution
Where in the first amendment does it say anything of the sort? It's a pretty short one, only one sentence long, but I can't seem to find it.
When two parts of the document contradict eachother, it's not at all clear to me why you are giving precedence to the older one. To me, it seems that the more recent document should be the one that carries more weight.
But if we're going to go with the oldest one, I'd remind us that American law is based on precedents made in English common law, long before the United States was founded. Perhaps we could plumb millenia-old legal cases for precedents that the constitution and its amendments should not be overriding...
And besides, speech is a fundamental human right, far more important than the development of arts and science. You can't have the latter without the former.
oh this is easy, for Github Inc it chilled their speech as this sanction targeted expression by saying that interacting with the codebase is a sanctions violation.
Github Inc's speech and expression was chilled because they thought they had liability OFAC sanction. Its not clear if they actually had liability. But they didn't want to find out.
> if I go and upload my fork of that code to GitHub it won't be removed?
Nobody can say what GitHub would do. But they’d unlikely be under legal jeopardy from hosting it. (They may not want to bother with monitoring whether you continue to develop it or not, however.)
> Why would they care whether I continue to develop it or not?
If you continue developing it academically, that’s fine. If you’re developing it to deploy it, that could be problematic. Most people don’t want to deal with customers where they have to monitor that distinction. (Those folks can always just host the code themselves.)
Code is both speech and action, like libel or threats. While the content of the speech might be protected under the First Amendment, the act embodied in the speech might be criminal or tortious.
In this case, while the content of the code might be protected, the activity it embodied violated the rules of multiple Western countries, not just the laws of the U.S.
That's as much an incitement to action as revving an engine at a red light is incitement (it's not, see entrapment laws). You don't have to run the code.
Private companies can of course choose to host whatever they want. And it's certainly not possible for Github to behave unconstitutionally because Github is not the government.
But... the fact that speech was removed from a platform in obvious response to legal uncertainty created by the government, puts OFAC in serious hot water. When it comes to First Amendment issues, modern SCOTUS decisions have been extremely focused on "chilling effects". And it's near undeniable that Github's removal based on the timing was a consequence of chilling effects created by OFAC action, whether intentional or not.
>It seems clear that mixers are used for money laundering, but many tools, perhaps all, can be used for both good and ill. Typically, however, tools are not prosecuted (or sanctioned), people are.
Just because humans have figured out how to cause harm with something does not mean it should be prohibited. Other examples that come to mind include: Tor, encrypted messengers, knives, guns, automobiles, explosives, cleaning chemicals, recreational drugs, cash, and masks.
This is what the prosecution in the Netherlands is claiming about Tornado Cash as a Software tool:
> About the concerns, the development of a tool is not prohibited, but if a tool has been created for the sole purpose of committing criminal acts, for example, to conceal criminal flows of money, then putting online/making available a developed tool may be punishable
I guess it all depends on what the bar is on a Dutch court of law to prove that criminal intent, if the developer's defense can successfully argue that the code was made to be generally used for the purposes of privacy rather than made deliberately to be useful to criminals, maybe he can get off the hook.
I'd personally draw the line at providing the service rather than the code itself; if there's any relation to the criminals using the service (e.g. direct payment for the service, kickbacks) that's different from merely putting the code on Github for whoever may benefit from it. The Netherlands goes further it seems.
I am very much not a lawyer, and certainly not familiar with the Netherlands legal system, but IMO it seems like "created for the sole purpose of committing criminal acts" would be quite a high bar. Certainly I know of people who used Tornado Cash with no intent to commit any criminal acts, either seeking privacy in legal transactions or just DeFi yield farming the TORN token.
My understanding is that the main protocol itself does not provide any money to those that developed or deployed it. However, they did set up a governance DAO, where some of the governance coins would be released to those who developed TC, and those coins could then be sold on the open market, allowing them to indirectly profit from developing TC.
They could also be operating nodes in the relay network, in which relay nodes agree to pay for the gas used to withdrawal money in exchange for a fee. The initial developers could quite easily be profiting by running some of these relayers.
IMO the same is true of Tornado Cash and digital currency in general, even though it is often overused by criminals. I have heard strong arguments for each of the following being used primarily or only by criminals:
* Tor & encrypted messengers: the whole "going dark" paranoia from mid-2010s
* Knives, guns, explosives: mass shootings and domestic terrorists; "nobody needs military style weapons"
* recreational drugs: see the War on Drugs which is really a war on poor non-White people
* cash: see the death of the €500 note
* masks: see the anti-mask laws intended to target the KKK
Note that I'm not claiming that society should never be able to regulate tools. Certainly I don't want the disturbed guy down the street making Ricin in his garage. We should keep in mind though that the tools themselves are value-neutral; it is the people who use them that give them a value.
How does TC launder money? It's a privacy tool that hides the origin of cash, but when you cash out through an exchange you still need to prove the origin of cash. It's good to avoid others snoop through my wallet though.
Most of people who used Tornado Cash are not criminals. How can you say it exists "primarily to aid criminals"? A fleeing criminal breaks into your house and hides while you are on vacation, apparently it was intended as a hideout for criminals all along...
What are you basing “most” on? It’s kind of hard to tell, after all. Do you think that “most” is roughly the same by volume?
I’d bet that there’s a chance a majority of users aren’t breaking local laws, at least if you exclude small scale tax evasion, but it takes an awful lot of people who care enough about privacy to pay extra for it to balance out the $450M USD-equivalent which just one North Korean group is alleged to have laundered. People who care about privacy will use it some of the time if they remember but someone with a lot of stolen money is going to use it every time and that will start to dominate the transaction volume, especially any time gas fees go up and people who don’t need to decide they don’t care that much.
Neither do mixers. They're a privacy tool, just like Tor and end-to-end encryption (both of which also do aid criminals; privacy makes law enforcement harder by its very nature).
Transmitting money and speech are very different things. Both have existing laws and norms. Tornado Cash was built to circumvent existing laws (AML, KYC & taxes)
Leaving aside the legality for the moment, because it's complex, jurisdiction-dependent, and constantly in flux, "crypto transaction laundering" is not in and of itself unethical. It depends on what you are intending to conceal. The parallels to encrypted messaging are really quite strong IMO.
If you are trying to hide a purchase (with your own money) from your wife because you think she wouldn't approve, that's totally ethical (if a bit of a silly relationship tactic). Similar if you're trying to hide a donation to an unpopular politician or charity from your employer. If you're trying to hide a donation to a militant organization, it's much more ethically complex and depends on the goals and actions of the organization. If you're trying to hide the source of ill-gotten money, it's likely unethical.
Separately, while the tool might be "primarily" used for unethical things, that does not make the tool unethical itself. Again it is the actions of the users that determine this. Even if hypothetically 95% of Tor users are pedophiles and ransomware crackers, that does not invalidate the "legitimate" ethical use of the tool by the remaining 5%.
By your logic the road crew who build the interstate are unethical because they happily build roads knowing money launderers will use them, without taking the slightest precaution to stop them.
And maybe some people have good reason to carry bombs onto planes. The existence of good uses for something is not the standard that we use to make laws. We make laws if the benefits of implementing the law outweigh the harms. There is very little harm to sanctioning TornadoCash, and the benefit is that crime becomes less profitable because the cost of laundering increases.
> In fact, someone would appear to be trolling the authorities by sending small amounts from prohibited Tornado Cash addresses to prominent people; those transactions cannot be declined, but receiving such a "gift" is technically in violation of the sanctions.
How can I be violating sanctions as a result of someone else’s actions? I’m not a lawyer, but I imagine one could just argue that receiving an output from a transaction that touches Tornado is considered different from interacting with Tornado oneself.
You wouldn't be, if you were an unwitting recipient, precisely because as a recipient you can't actually control who sends tainted crypto to you. In this hypothetical, just report it to the feds and they'll provide an address for you to send the "gift" to.
You'd only get into trouble if the feds see a large, ultimately untraceable transaction from your crypto accounts prior to the "gift," in which case you'd have to explain to their satisfaction why you had a large untraceable transaction followed shortly by the recipient of tumbled crypto. (It's doable, you just have to be able to explain it.)
Given how easy it is to create a wallet (or a dozen), and how many have already been created in years long before this became an issue, I don't think that's a fair comparison.
> Mixers (or "tumblers") work by collecting up a bunch of deposits, which get coalesced into larger chunks over a random period of time, then doling out portions of that chunk as withdrawals at a later time. Naturally, a percentage of the deposits (1-3% normally) typically stay with the service as profit.
Actually I think the v1 contracts did not require or accept a fee for usage. I'm not sure about their v2 contracts which incorporated some sort of governance token called TORN.
> Because the deposits and withdrawals are not synchronized in time, users can break the link between a particular chunk of cryptocurrency and their holdings.
This is not false, but a bit misleading. Being decorrelated in time helps against analysis that tries to match inputs and outputs, but it's not what breaks the link.
On withdraw, how does the service know that the user has a claim to the funds? A centralized service can store this in a database off-chain, but Tornado is permissionless, there is no third party database, only the smart contract. If you would store it naively on-chain, the link would be public, defeating the purpose. So instead, Tornado uses zero-knowledge proofs that allow users to prove that they have a claim to the funds, but nothing more than that. Crypto (in the original meaning of the word) is what breaks the link!
They also don't take a fee for usage. The component that takes a fee is the Relay network, which simply forwards withdrawals to wallets that don't yet have any currency (and therefore cannot pay the transaction cost of withdrawal itself), and take small fee for the service. They're just gas forwarders, not anything really special to Tornado Cash's function.
But you can use the Tornado Cash pools themselves without the relayers.
Couldn't we argue that the devs reasonably knew it was being used for money laundering? It got a light shined on it during the investigation of the crypto.com hack. If so, they knew they were profiting off of it, right? [1]
Tornado Cash also did not comply with the OFAC list of known sanctioned wallets.
However, it's clearly not that simple, from the article:
> "If Tornado Cash knows who deposited the money and who took it out, that’s not money laundering."
> "Smart contracts are not legal contracts."
> "Every service provider has a certain amount of illicit activity."
So what if they profited off money laundering, and knew it? The guy on the interstate road crew knows damn well the road is used for money laundering, and he builds it anyway and happily deposits his paycheck without taking the slightest effort to impede the launderers.
His paycheck comes from the state, not the mobsters. There’s a big difference between building something which criminals can misuse and being paid by someone with no connection to the criminals compared to building something which is designed for criminal activity and directly receiving payment from them. The Dutch release sounds like they intend to prove that, which is a pretty significant distinction if they can back it up.
No his paycheck also comes from the mobsters. Most of the mobsters are still registering their vehicles, buying gasoline (gas tax), and if they are money laundering they are funneling it through legitimate avenues that they (typically) pay taxes on.
I also object strongly to Tornado Cash being "designed" for illegal activity.
This the root of your misunderstanding: his paycheck is not in any way coming directly – note how your very next sentence directly contradicts this assertion – and criminals paying some taxes like everyone else doesn’t mean that the purpose of the tax is criminal, and nobody working on the project thinks their goal is to facilitate crime.
Tornado Cash’s design does not comply with legal requirements in many countries. Until that changes, it’s going to be seen as a tool for breaking laws because that’s what it does by default.
I would object that you have evidence that Tornado Cash was created with the goal of facilitating crime. Sure they knew it would facilitate crime, just like the roads do, but we don't know that was the goal (and I doubt it was).
>Tornado Cash’s design does not comply with legal requirements in many countries.
As far as I know there were plenty of legal reasons for many people to use Tornado Cash, probably even Americans (up until it was sanctioned). One example is a legally owned "cold wallet" being firewalled from a hot wallet. It's not wrong to create something that may be used illegally some (or even most) of the time or some of the places.
>his paycheck is not in any way coming directly – note how your very next sentence directly contradicts this assertion –
If that's your assertion, then the person selling gasoline to the mobsters is culpable then, knowing that mobsters buy gas and knowing that gas facilitates crime, but doing nothing to specifically check if someone is a mobster before selling the gas.
> purpose of the tax is criminal, and nobody working on the project thinks their goal is to facilitate crime.
But that's precisely my point as well. You can operate or design a mixer without the goal of facilitate crime, even with the knowledge it will. The purpose of profiting may be to profit off of legitimate users using the mixer, and the unfortunate byproduct is bad people sometimes use a service for ill despite you not intending for that to happen. Now I can't prove intent, but I doubt you can either.
>paycheck is not in any way coming directly
A second point -- your problem is that it went directly and not through an intermediary? OK, so it would have been fine if a cousin or whatever set up a shell company and then paid them through the shell company, then it would be indirect. I don't buy that an extra layer of indirection somehow makes it better. Mobster paying tax (or shell company) and that tax (or shell company tranfer) going to you is a mobster paying, with an extra step. I mean Tornado cash is doing an analogous thing to what's happening with tax money -- the users may or may not be doing illegal things but the people getting paid out of the 'mixer' of the tax treasury are getting a mix of good and mobster money. You could argue taxation is in part just a way of money laundering to profit off of mobsters and crimes.
Of course the difference here is with tax money, there really is the provable intent make money directly from crime. Even if someone informs the IRS their source of money is criminal in the same envelope the money is in, IRS will happily take 100% criminal money with full intent for the coffers to directly profit off the crime.
Would someone kindly tell me (or direct me somewhere) how to extract funds from Tornado Cash given the web frontend being down? As far as I understand, the web must be just an interface to ethereum contract. Thanks.
(Given the sanctions concern US citizens only, I really can't understand just why there did not any alternative web interface for the rest of us pop up)
The reason for people not hosting a alternative interface is because they are scared. The US has made it clear time and time again (via extraditions) that country borders matter less than we think when the US government wants to enforce its laws worldwide.
This has the potential to be a major problem for the upcoming merge. If OFAC regulations hit major public companies like Coinbase & LIDO etc., they may start censoring transaction at the base layer (not in a DAPP). And given that they represent the majority of stake currently, ETH would effectively no longer be a decentralized project.
Complicating the problem is at least one large validator (Coinbase) has stated that they would shut down their staking business instead of sanctioning at the base layer [1]
> Here at LWN, we generally do not pay much attention to the machinations of the cryptocurrency world—all of that tends to be far outside of our remit. There is a fair amount of distasteful hype, snake oil, and scams that go with that territory as well. But this event is not about any of that stuff, really; this comes down to a question of fundamental freedoms and human rights.
There is a much deeper contradiction between cryptocurrency and the free software movement of which LWN is an outpost.
The goal is to keep software free of the bonds of scarcity inherent in physical goods. Because digital goods are virtually free to copy, they can only be limited by typical systems of ownership when artificially forced to. Software spread openly is better able to help everyone rather than just a few capitalists. Private industry has fought against this in its drive to grind profit out of everything it can.
Cryptocurrency is an effort to dig artificial scarcity deeper into digital goods than ever before. So it's strange to see FOSS advocates getting crypto's back. The people driving the spread of crypto are zealous advocates of a system inherently opposed to FOSS ideals. Like many before them, they will push software freedom to the extent that it helps them and then relentlessly pursue its enclosure when it doesn't.
FOSS is not the same thing as "everything digital should be free". They are not the same people/movements, though I will admit that there is some overlap.
It's absolutely true that a vast majority of crypto projects revolve around the idea of artificial scarcity, leading to a disgusting commodification of absolutely everything. However, and ironically enough, code is the one thing that crypto cannot commodify, which is what FOSS cares about.
> There is a much deeper contradiction between cryptocurrency and the free software movement of which LWN is an outpost.
i agree. but for many in this community there’s also a contradiction to physical enforcement of some external value system onto someone operating in this open space.
if the surface of FOSS is something like “freedom to use, inspect, and modify the code you interact with”, then below that iceberg is many different thoughts on how that’s preserved. at the very least, there’s a camp that thinks freedom of association underpins this. “FOSS as a community and ideology can exist because its members are free to pursue that own goal of theirs. cryptocurrency isn’t contradictory to the underpinnings of FOSS, because the people who freely participate in FOSS for ideological reasons will freely choose to not embrace cryptocurrencies.” — is one possible voicing from under that iceberg.
here on the net we’ve enjoyed quite a few years of being able to build whatever we want, largely free from the forces felt in whatever physical society we come from. yes, there’s been things like the arms control of RSA, the DVD decryption key being made illegal to spread, and so on. those also came with plenty of meta-discussions like this one, and since then we’ve enjoyed a good decade where most of us really do feel free to build.
FOSS exists, among many other communities, because we’re operating within a larger sphere which doesn’t impose any one universal set of values. my worry is that we see an external value system be imposed on this underlying fabric. what are the odds this system will share my values? or be compatible with the values from which FOSS may emerge, for that matter? where then will i go but back underground?
The general idea is that for something to have monetary value, it has to be scarce. Why would you ever trade a loaf of bread for something that you have an infinite supply of in the first place?
Cryptocurrencies are fundamentally a means of creating a decentralised digital scarce resource, and the Bitcoin blockchain is a rough proof of concept that it is theoretically achievable, albeit using a spectacularly inefficient method.
Scarcity is a hard requirement for something to be money.
Since we as a society require money to transfer and preserve value, the money being open-source, decentralized artificial scarcity(like Bitcoin) does not contradict with FOSS ideals. On the contrary, it widens them from a technological sphere to economics.
ideological nonsense. money has to have scarcity. implementing scarce money with free open source software is not an affront to anything about it. FOSS only takes away the advantage of intellectual property. FOSS is not a magical weapon against the menace of capitalism or anything like that. it doesn't tarnish when you use it to make fancy accounting software or other things people may not like. your notion that FOSS has pure and impure uses is an affront to the purpose of FOSS. you don't get to decide what people should do with it.
> The goal is to keep software free of the bonds of scarcity inherent in physical goods. Because digital goods are virtually free to copy, they can only be limited by typical systems of ownership when artificially forced to. Software spread openly is better able to help everyone rather than just a few capitalists. Private industry has fought against this in its drive to grind profit out of everything it can.
No it isn't. You are describing the 'Open Source' movement which is the scam that the tech bros ran with to popularise and to get around the issues in the free software movement; which the latter has been a total and abject failure.
As soon as their own tools have been used by scammers, criminals, etc have always turned out to be for the ideals that they have fighting against; which is against the development of opaque, non-free surveillance software used against the general public created by governments, big tech, and the like. Both the free software and open source movement have hand in hand made no difference in stopping the surveillance and spyware that is proliferating today.
> The people driving the spread of crypto are zealous advocates of a system inherently opposed to FOSS ideals. Like many before them, they will push software freedom to the extent that it helps them and then relentlessly pursue its enclosure when it doesn't.
Yes. This is exactly the reason why 'free software' is a total failure and did nothing to stop the rise of cryptocurrencies which will advance more surveillance.
I'm old enough to have experienced a largely cash-based society that was also virtually without any tracking. The government would know you exist, your school/work, and pretty much nothing else.
The default was freedom, and it being up to the government to prove you're malicious, not the other way around.
What I do in my private life and whom I transact with is my business, and not that of the government or 5,000 companies. If you think I'm cheating, come with a well documented warrant based on evidence.
That was the mentality. Now we're cheering as we're accelerating into a digitized, centralized super authority that can wipe you out, or even an entire category of people, with the push of a button.
You can't do that with cash. You'd have to actually visit thousands of people, do research on all, obtain a warrant, arrest them, process them, etc.
All of this is absolutely about fundamental rights. I have no need for any mixers, but the attitude "guilty until proven innocent" isn't very pro-freedom.
You must be in your 90s? And white? Because what you describe has not been a reality for minorities, ever, and certainly not within the lifetime of most people alive today.
Cash bills have had serial numbers for decades. The Western governments have had the technical ability to track cash transactions for decades.
So that would be the 80s. My dad got paid in cash. You spent in cash. You give cash to friends, family. None of it was tracked.
The government had no idea how much cash you had. Nobody had any idea what you spent it on or whom you gave it to.
Absolutely unhinged to bring "white" into this. The entire world ran on cash decades ago. Especially in the developing world this is still partly true today. What exact point are you trying to make?
Do you even know how a serial number on cash works? It doesn't tell you anything about transaction history as those are not logged. Even if you did do that, payments are anonymous so you can't track it back to a person. There were no cameras.
The point of a serial number on cash is not tracking, it's flagging. When a bank got robbed and you know the serial numbers of the bills, you can monitor if somebody spends them.
The bank secrecy act, which required financial institutions to start tracking and reporting to the government large or suspicious cash transactions, was passed in 1970. So unless your dad completely avoided banks, you are misinformed about what privacy he had.
On the other hand, if he really did use cash for everything, you could do the same thing today. Nothing has changed on that front.
When the bank secrecy act was passed, the cutoff was $10,000 (inflation adjusted ~$70,000)
Since then, some of the fines for violating currency reporting have been adjusted for inflation. But curiously, the reporting cut off was not inflation adjusted and remains at $10,000.
In 1970, thus, a 'large' transaction was one that exceeded the median family annual income. In 2022, a 'large' transaction is a beat up honda civic.
I started working in the 70s. Through until the 90s, I was paid in cash. The company didn't track which bill serial numbers went to which employee.
That was the same for pretty-much everyone in Australia until the 90s, when we started to get paid directly into bank accounts. But, I worked at a bank at that time, and I can tell you that our tellers and ATMs didn't track serial numbers then either: we had no record of which bills went to which customer.
And that was true regardless of your age, gender, religion, ethnicity, etc.
I appreciate that this has probably changed since then, but ... that's kinda the point: it used to be private.
Before the advent of automated cash machines who was writing down serial numbers of notes? Maybe tellers at banks after large deposits or suspicious deposits. Maybe secret service or the fed. I doubt anywhere near 1% of transactions had the serial number recorded.
I'm sure that shit gets automatically recorded every time it enters the bank now, along with any automated machines you use, so a completely off the cuff guess for me is 30% of cash transactions today may have their serial numbers recorded. Not quite as bad as bitcoin, but probably often enough it's easy enough to trace back to you.
That was kind of the point. US and Europe have had the technical ability to trace cash, but not the resources or werewithal to do it unless they were dealing with money laundering or counterfeiting. That being said, the federal government does track money more granularly now--cash payments to businesses usually get dropped off at the bank on a nightly or weekly basis, and banks do scan all bills they receive and compare them against a list of flagged or counterfeit bills.
And for the most part, minorities using large amounts of cash were always subject to additional requirements to "prove" their identity and the provenance of the money. The legacy of this is that banking amongst minorities is a lot lower, especially in the black and Latino communities.
> It is not a fundamental freedom nor human right to be able to anonymously transfer money.
So? I still want to be able to do it, as I can with physical cash.
Besides, "fundamental freedom" and "human right" are semantic social constructs — what counts or not is quite malleable from polity to polity. Actual rights are natural rights, as in things that no one can realistically stop you from doing (suicide is perhaps the best example as the extreme of bodily autonomy; free speech somewhat falls into this category but it gets political as soon as there are publishing media involved beyond literal vocal speech)
I mean human rights are pretty arbitrary and people disagree. Think saying transferring money is a human right is as valid as any other right you come up with.
The idea of natural rights is frankly laughable. Humans have always had to fight for their rights. Democracy is the form of government where the fight is done at the ballot box. Seems pretty clear to me that the American people do not believe money transfer systems without AML/KYC are a right that people have.
>>The idea of natural rights is frankly laughable.
wow... That is a take I will say that, the entire foundation of the American constitutional system is based on the idea of natural rights but sure it is all laughable
>Humans have always had to fight for their rights
of course... I am not sure how that is a rebuttable to the concept of natural rights. Nature is violent place in it natural state...
>Democracy is the form of government where the fight is done at the ballot box
Democracy is 2 wolves and a lamb deciding on what is for dinner.
A Constitutional republic gives the lamb power over the 2 wolves.
> Seems pretty clear to me that the American people do not believe money transfer systems without AML/KYC are a right that people have.
This is probally the most laughable line in your entire comment, do you honestly believe every law ever passed by the US Congress, or State government enjoyed majority support at the time of its passage
Really?
For decades now the "American People" by HUGE majority support has wanted to legalization of weed, last I checked that is still illegal
> the entire foundation of the American constitutional system is based on the idea of natural rights
Although I believe natural rights aren't real, they are a very useful concept to convince people of. If you're able to get people to believe "life, liberty, and the pursuit of happiness" are somehow fundamental makes it much less likely for them to take those things away from others. So although the founders were wrong in a literal sense, their ideas did immeasurable good, so I do have a lot of respect for them.
> A Constitutional republic gives the lamb power over the 2 wolves.
Republics are still democracies, especially in the way that matters here. A system of government that is beholden to the vote of the people. There would be nothing wrong or unnatural about everyone deciding property rights no longer exist and voting to seize the means of production. We make our own rights.
https://www.pewresearch.org/fact-tank/2019/11/14/americans-s... doesn't support your marijuana stance. Decades ago the american people by HUGE majority wanted weed illegal. As that changed it became legal, which it largely is today in places that want it to be. You can certainly get into federalism versus local government here, but what matters is that we are creating our rights as our stances changes, just as we have for our entire history.
no, Constitutional Republic differ in one HUGE way, they disallow the majority some power. Every one should reject the concept of Majority Rules. That is a TERRIBLE way to organize society and leads to all manner of abuse.
Majority power needs to be check with natural rights that can never be violated for any reason.
>>A system of government that is beholden to the vote of the people
This is an incorrect statement if you are talking about the Federalist system of government created by the founder of the US. it is much more complex by design than a simple majoritarian democracy. People with a similar world view as yours have been working for 100's of years to dismantle the republic and replace it with a more majoritarian system, leading to all kinds of problems, including the massive division we see in the nation today.
>There would be nothing wrong or unnatural about everyone deciding property rights no longer exist and voting to seize the means of production. We make our own rights.
There would be lots wrong and immoral in doing that, you seem to believe in the concept of "life. Liberty and the pursuit of happiness" well that is based in the principle of Self-ownership, one can not own themselves without the ability to trade the product of their own body freely with others. "Collective" ownership of "means of production" means the collective also owns the output of the labor, and in effect owns you the individual, you cease to be a single person, and become "one of us"
You're really getting caught up in semantics here. Your read on what democracy means is just leading you to talk past me. A democracy is a system of government where most adults can vote. That's it. A Constitutional Republic is a type of democracy. And the fact that we aren't a direct democracy doesn't change the fact that rights are not natural.
Take anarchy. What rights do people have? None. Because there are no natural rights, only the legal ones we create for ourselves. In our system our rights stem from the will of the people. Not the hand of god. Nor the universe. If the people elect a government on the basis of granting or removing rights that's what the government will do.
it is not semantics, it is Philosophy and the foundation of ethics
If there are no natural rights, then it would not be unethical for a government to infringe upon those rights, Thus says a China or North Korea or Russia are perfectly ethical governments because the government has choose their citizens do not have X rights and that is in their authority to do has a government.
Instead the founding principle is "we hold these truths to be self evident" this is a foundational principle, and Philosophy of natural rights. Rights that no ethical government can violate even if the will of the people was to "agree" to the infringement.
Authoritarianism is the belief that governments are the all powerful, and people are subservient to the government, and government bestowed up on the citizens their rights, I reject Authoritarianism completely and with out reservation
Pointing out that government can be instituted that would infringe on natural rights is not proof that natural rights are non-existent
Anarchy means when you defend your rights, the people you're fighting against, or even alongside, don't have a legitimate monopoly on violence. To some that thought may be exhilarating, to others that may be terrifying.
I think you’re getting tripped up on language, which is a shame, since you’re missing out on some interesting ideas.
The natural rights thing is more of a thought experiment: first, imagine there is no government. What do people have? What’s the “state of nature?” This was a pretty radical idea in Hobbes’s time. So it doesn’t make sense to believe a thought experiment isn’t real. Like, it’s a thought experiment. Discussing which rights exist within the framework is the thought experiment.
Then social contract theory is like okay, why should anybody give this up? What do they gain? Large groups of people don’t just do stuff for no reason (supposedly).
Democracy means power comes from the common people, not necessarily voting. E.g. Athenian democracy selected officials at random.
> imagine there is no government. What do people have? What’s the “state of nature?”
People have whatever they can take for themselves, a.k.a. nothing. The base state is that people have no rights at all. Rights are nothing but an agreement among society that if everyone follows these rules things will be better. That agreement can change at any time.
It's an interesting difference of opinion. There are those who believe natural rights are naturally conferred to the individual, and others that believe rights are conferred by society.
These two personality types often clash harshly, because one sees society as having no right to interfere with his rights and the social rights person sees the dissenting individual as having no right to abstain from the "social contract" that they at best agreed to merely by being born and remaining in the boundary of many members of that society.
In the earlier days, the US was far more individualistic, at least in the Western territories. There was some hope for the more individualistic rights leaning individual. Now I'm not sure what our last bastion of hope is from persons who don't recognize us as having any rights without dear government.
KYC is a fourth amendment violation as it as a government imposed search. Weed is much harder to defend as a right as it is not an enumerated right, unlike the right to be secure in your person and papers.
> Seems pretty clear to me that the American people do not believe money transfer systems without AML/KYC are a right that people have.
Maybe it's just because of the area I grew up in, but nearly everyone I know that is from outside the city or government circles is strongly against AML/KYC. I'm nearly certain if you took a democratic vote of everyone in the US they'd vote against AML/KYC. Same goes for TSA, yet somehow they still exist.
There's an easy way to settle this. Do 51% of Americans want cash to be legal? If so, most Americans believe in having a money transfer system without AML/KYC.
In Australia, cash transactions of $10,000 or more must be reported to the government (AUSTRAC https://www.austrac.gov.au/). So ... cash can be anonymous, but only up to a certain point.
Making multiple transactions of $9999.99 is possible, but it does invite perhaps unwelcome scrutiny.
The US passed similar laws, but at the time it was passed was the year 1970, when $10,000 was worth, inflation adjusted, over $70,000 and more than the median household income. They used the fact that the majority might have been against these laws but too apathetic to stop it as it was such an incredibly high value compared to what much of the public ever hoped to have in cash savings, to deceive the public into accepting a non-inflation adjusted figure that slowly tightens the noose to ever smaller and smaller transactions (inflation adjusted).
Anonymously transferring money is key to exercising a bunch of fundamental freedoms (like freedom of speech), and the failure of the population as a whole to protect this right was a huge mistake. In this way it is similar to the right to private communications. (All my opinions of course)
I'm really confused how we're still taking the position that if something is free speech that means it can't be controlled, because the constitution.
Like, lol, what?
You can't publish someone else's book, or nuclear weapon plans, or a credible murder threat
"But code is free speech?"
One, it's speech, not free speech. They're not the same thing and the linked decision doesn't say what everyone's claiming it does.
Two, freedom of speech doesn't mean you can't be punished for what you say. Go try yelling fire in a crowded theater, and try to plead freedom of speech. Watch what happens.
Three, they're not being punished for the speech, they're being punished for defying monetary controls. Just because there was speech adjacent doesn't mean anything.
We should be able to see through things like this.
There's been a lot of hand wringing about "how can the SEC sanction an open source software?" The fact of the matter is, code is not value neutral. Code may be protected under free speech, but that doesn't make it legal to actually execute that code.
Just because it's on the blockchain, doesn't mean people aren't ultimately responsible. People chose to develop Tornado Cash, they chose to deploy it to the blockchain, and they chose to run the contracts. And now everyone involved in Etherium has to deal with this sanctioned code touching everything in that space.
There's been a lot of hand wringing about "how can the SEC sanction an open source software?" The fact of the matter is, information is not value neutral. Information may be protected under free speech, but that doesn't make it legal to actually route that data.
Just because it's on the internet, doesn't mean ISPs aren't ultimately responsible. People chose to route internet packets, they chose to build and manage data centers, and they chose to run the service. And now everyone involved in the internet has to deal with this sanctioned information flowing with everything in that space.
Clearly, we need to require all IP packets to be transmitted only from people and entities who are registered with the government so we can censor any bad data from being transmitted. Otherwise, illegal information might flow.
> Clearly, we need to require all IP packets to be transmitted only from people and entities who are registered with the government so we can censor any bad data from being transmitted. Otherwise, illegal information might flow.
I heard the Chinese government has a great implementation of this.
Just because Tornado Cash and other mixers survived for this long doesn't mean that the law suddenly changed or anything. All it means is that there was enough evidence collected to justify OFAC/SDN sanctioning. Then, the dominoes fell.
Tornado Cash was /never/ okay, but the government waited patiently for the evidence and acted when it had it. The same thing should be assumed to be true for /all/ systems in this sphere. The US dollar is the world reserve currency, and the SDN list is a death sentence for any project or system if that system has outputs to US dollars anywhere in the chain. All electronic cash transfer systems should be assumed to be incompatible unless there's a clear AML chain established that can reasonably defend against a blanket sanction.
In the exact same way, the SEC will go after any cryptocurrency "securities" that they want to, as soon as those securities blow up. Filecoin had an ICO just like a lot of other securities, but seemingly because it hasn't blown up, the SEC hasn't come knocking yet. It's just an evidence collection game.
Yeah, and I think it's really interesting how widely accepted this stuff is. I mean, it's literally the financial version of global mass surveillance. Governments gotta know every single transaction that's ever happened because reasons, and if anything bad happens and it turns out someone's lack of total surveillance and record keeping of everyone they ever dealt with somehow helped it happen, well...
Sometimes it feels like people don't realize how tyrannical and dystopian that is. Like money laundering is some unbelievably evil crime that makes it okay for the government to surveil everything in hopes of stopping it.
Should the government be handed every transaction on a silver platter every day? Probably not, but I don't think you'll find many people in the big wide world agreeing that financial activity should be forever unavailable to governments, courts or anything else, even under applicable warrant, which is what these services provide.
And why is this absolute privacy bad? Where to start? Criminals hiding ill-gotten gains is only a small part of it. We have the funding of rogue nation states and enabling of ransomware, which is roughly in the same ballpark, sure, but very harmful. Then we have straight-out tax evasion. We also have dictators and despots who plunder their countries and enrich themselves. Should their activities be private? Should we just allow them to siphon money off to other countries and live the high life while their population suffer? It happens all too often already, but in much of the west now we are catching this stuff and denying them those things because we can see some of what's gone on.
And what about our own democracy? Absolute financial privacy can allow wealthy interests to brazenly buy politicians, with guarantees of untraceability.
So no, I don't "realise" how tyrannical and dystopian that is, in fact to me it looks like it helps prevent a variety of forms of dystopia, in which the rich and the corrupt could even more easily and directly buy democracy out from under us.
The fact that you can't currently have a system which provides privacy until an authority (such as the court system) demand things be unlocked, well that seems like a problem for cryptocurrency users, not the law.
Be careful that you do not become even worse in the attempt to fight it.
We are all engaged in a politico-technological arms race: government makes laws, people make technology that circumvents them. They must create ever more tyrannical rules in order to stop the latest technology. So what is your limit? How far will this loop continue until either criminals win or people are crushed under a totalitarian government?
> Should their activities be private? Should we just allow them to siphon money off to other countries and live the high life while their population suffer?
Should governments warrantlessly surveil everyone to prevent such things? Corrupt people getting rich off of taxpayer money sucks but I wouldn't trade away my privacy in order to prevent it.
> The fact that you can't currently have a system which provides privacy until an authority (such as the court system) demand things be unlocked
Yes, because governments, especially the USA, are notorious for respecting the rights of their own citizens not to be surveilled without reason. Right?
Not only is this not my 'limit', I view the incident we are talking about as a very positive move. Traditional finance laws should be enforced in the cryptocurrency space. "But blockchain" is not a good answer to why you shouldn't have to.
They aren't even creating any more rules here! They're literally applying the exact same rules that are already applied to everyone else in every other avenue. If cryptocurrency systems can't play by those rules, then that's a cryptocurrency ecosystem problem.
> Should governments warrantlessly surveil everyone to prevent such things?
You'll note I already explicitly said no to that in the comment you're replying to. You then go on to talk about "muh privacy" in absolute terms as well. This black/white, all/nothing view of the world is part of the problem. I don't think government should be surveilling everyone all the time by default, nor do I think that we should be enabling completely untraceable large-scale money-laundering facilities that can't even be examined under appropriate warrants. There is an entire spectrum of shades of grey between those two. It may even be multi-dimensional, and the entire 'mainstream' financial system lives in there. Presenting it as only one or the other is fallacious. If blockchain systems can't support any sort of middle ground then again, that's a cryptocurrency ecosystem problem.
> Yes, because governments...
You're making the case for democratic reform here, which I am all for. Democratic reform and democratic oversight. Sounds good.
It's just private digital currency. If they suspect someone is laundering money, they should have to seek real warrants and then knock on actual doors. They shouldn't be able to just put the burden on corporations and citizens to do the mass surveillance for them so they can prove to the government that they're not criminals up to no good with their hard earned money.
Privacy is a reasonable expectation and these currencies are the tool to achieve it. They aren't to blame when some criminal uses them to do whatever. Are you against citizens having access to cryptography the state can't break as well? Because that's the standard by which these technologies are judged.
> You're making the case for democratic reform here, which I am all for. Democratic reform and democratic oversight. Sounds good.
Sounds great but until such a thing happens there is no reason to trust these governments.
The corrupt buying democracy out from under us? It's already happening, it's not even hidden and money laundering laws don't stop anything. We have these billion dollar corporations lobbying the US government, essentially buying laws that favor them. Copyright industry robbed the people of their public domain rights and these traditional laws didn't do a thing to stop it.
But 'they' already do put this compliance burden on citizens and businesses in all other avenues of finance. There is nothing new here, and as I said before "but Blockchain" is not a good enough reason to exempt sections of the industry from this.
> Privacy is a reasonable expectation
Sure, to some extent, but absolute, mathematical privacy even in the face of court orders? Really not so much. Yeah, we can agree that 'they' should have to get warrants for a lot of this stuff, but services like Tornado make it impossible to execute said warrants, they do a complete end run around legal, legit access to this information. Which is why we as a society seek to stop those sorts of services from running in the first place. Like I've been at pains to say in my other comments here: there is an absolute fuck-ton of middle ground between complete financial transparency and complete, mathematical financial opacity.
> Are you against citizens having access to cryptography the state can't break as well?
No, because fundamentally speech and finance are not equivalent.
The fact that you can use cryptography to permanently obscure financial transactions doesn't mean that we should just allow that to happen in the name of privacy, privacy of a degree which we explicitly don't afford to actors outside of the cryptocurrency space. Encrypted comms - great, services using cryptography to facilitate money-laundering, not so much. There is no inconsistency here. Lots of finance houses use all sorts of fancy crypto to keep their stuff secure, but they also keep compliance records so that if the courts do come knocking with the appropriate legal rights to data, they can deliver it. I know this goes massively against the ruling ethos in cryptocurrency circles, and a lot of cipherpunk type mentality, and that's really why we're seeing this stuff escalate, because as more and more people try to take ETH/BTC/whatever mainstream, the more it buts up against the existing system and the more the regulators take notice.
> The corrupt buying democracy out from under us? It's already happening, it's not even hidden and money laundering laws don't stop anything.
It is happening, but I disagree, money laundering and oversight laws catch a bunch of stuff, there have been multiple stories of (for instance) Dictators' wives being caught buying expensive property with dirty cash in Western nations, then being denied access to their accounts.
I agree, lobbying in the US needs serious attention. I don't think Tornado Cash is going to fix that, in fact widespread use of such services is almost guaranteed to make it much, much worse, especially in countries where we already restrict lobbying much more!
I'm not going to claim to have never argued in such a manner myself, or that my phrasing is particularly helpful. I also just need to take some time off work.
The only way I could think of to really keep identity separation in a way that doesn't leave me beholden to a third party was to use some sort of crypto mixer. I don't trust institutions not to leak data that could be used to establish an identity link.
Do you think I'm evil?
If you want to use copyright to protect your work, and end up suing, remaining pseudonymous will be difficult.
Courts will only sometimes allow an anonymous/pseudonymous complaint. Even when they do allow it, they may require that defendant be given access to your real name, even if it remains sealed from the public. Even if you are somehow successfully in remaining anonymous to the court, the defendant, and the public, you are only going to be able to do that via being represented by an attorney, who will most likely need to know your name, and the attorney’s identity will be public.
(The attorney would likely need to know your real name for ethics reasons, like making sure they are not representing a defendant you are suing in some non-private lawsuit. )
But given you don’t trust institutions to not leak identity, I suppose you cannot trust the attorney to either.
The way to make money as an independent is to make distinct/unique content people can immediately recognize as yours and open up donations (patreon). You can also time gate access to new work to some extent. If there's a better model, I'm unaware.
Copyright disproportionately protects large firms, not individual creators. There are exceptions, of course, but they are far from the norm. Hell, most big companies I've worked at have clauses that say I assign them all rights to all work I make while employed with them. Those are fun to deal with.
Short of massive success, I would be better off as an illustrator if copyright were entirely dismantled.
I trust attorneys on a case-by-case basis. So far the ones financially aligned with me have been swell.
I disagree. My livelihood depends on said identity separation. I agree such a leak is very unlikely, but it could be life-changingly detrimental if it happened. Or it could raise public opinion of me, who knows? I believe in risk management.
>consider what else it is you're giving cover to
I can see it that way. But I mostly transact in the US dollar, and voluntarily live in the US. Do I therefore support the US goodbye-kiss dronestrike on an innocent Afghani family?
IMO participating in a system of commerce does not necessarily confer the responsibilities of some participants onto others.
There shouldn’t even be a need to launder money, no matter how one came in possession of it. Otherwise the burden of proof is inversed, where I have to prove to basically the preponderence of evidence standard to virtually all financial institutions that my money is not proceeds of some illegal activity.
Anti-money laundering laws just add more crimes on top of the illegal activity in the first place, presumably because of lazy job by the politicians caused by lazy investigators, because evidently it’s easier to prove the money laundering fact, than the underlying criminal activity. Which is the same reason why we have civil asset fortfeiture, which, quite literally, is nothing more than legalized theft.
> Then we have straight-out tax evasion.
Kudos to whoever manages to get away with straight up tax evasion. Taxation is inherently violent.
> And what about our own democracy? Absolute financial privacy can allow wealthy interests to brazenly buy politicians, with guarantees of untraceability.
In that case, the politicians have too much power.
It depends on your morality.
Let's assume we're talking about tax evasion: the government is telling its citizens "Give me 50% of your profit or I'll put you in jail". This is violence and it's immoral. Escaping this violence is not a crime in my book.
Let's assume we're talking about trafficking illicit substances: the government is telling its citizens "Don't trade these items with each other or I'll put you in jail". This is violence and it's immoral. Escaping this violence is not a crime in my book.
Let's assume we're talking about people corrupting politicians: this is immoral but, on top of often going unpunished in the current system - it's unfixable. The only way to reduce this occurrence is by reducing (or entirely eliminating) the power centralised in the hands of politicians so that no-one will want to corrupt them. No need to monitor all financial transactions.
Let's assume we're talking about people killing other people: this is obviously immoral. Still, pick any "legal" war initiated by government and you'll find more dead innocents than what crime cause. Are we preventing money transactions to maintain our army? And then, is tracking this ill gotten gains an efficient way of improving the situation? I think it will be largely ineffective, it's much easier to foster a society where we have private protection services that work, instead of an inefficient police force collecting a paycheck from the taxpayers regardless of performance.
When you wield an hammer everything looks like a nail - but monitoring citizens like in 1984 is a inefficient solution meant to fix symptoms of bigger problems: namely our centralisation and dependance on a central government, their monopoly to violence and their obsession with regulating our lives, certainly "for our own good" and not to exercise and maintain their power.
I could just as well say "hoarding resources and not sharing them with the rest of society, just because you're able to, deprives others. This is violence and immoral." That's not necessarily my personal view, but do you see how morals can differ?
> Escaping this violence is not a crime in my book.
The key concept there being that it's "your" book. Laws are not objective and absolute, they're the result of the society they exist in, preferably (in my and most people's opinion) derived from democratic participation. Your book is not aligned with the laws of the country you live in. You can lobby to change that, but it does not mean that the laws are invalid or shouldn't apply.
This is so full of fallacious assumptions and facile ancap thinking it's hilarious.
If you complain about the only source of violence to you being the government, then congratulations the system is working for you. Some poor, especially black people think the opposite, that their government has abandoned them and left them exposed to both violence by fellow people and authorities who abuse their powers. What do they want? To be treated like their rich or white fellow citizens.
I don’t even know how to respond to this sort of caveman “it evil” thinking but..
> funding of rogue nation states
Rogue according to you?
> straight-out tax evasion
Avoiding the violent theft of your hard earned money is now evil?
> We also have dictators and despots who plunder their countries and enrich themselves. Should their activities be private?
Their money should be. Store of value should be.
> Should we just allow them to siphon money off to other countries and live the high life while their population suffer?
This is a question that has very little to do with whether money is private. Inequality is not impossible to detect even if money is private.
> And what about our own democracy? Absolute financial privacy can allow wealthy interests to brazenly buy politicians, with guarantees of untraceability.
They don’t even need privacy. They do it in broad daylight.
The government didn't even sanction all the smart contracts. BSC chain had more activity than the Ethereum contract, but they didn't seem to know about it. Furthermore, Tornado had compliance tools built in that allows users to prove where their funds came from to make themselves compliant with KYC rules.
The whole thing seems really hamfisted and poorly thought out. The US Secretary of State even tweeted incorrectly that North Korea built Tornado, then had to delete the tweet! https://www.coindesk.com/policy/2022/08/08/us-secretary-of-s...
I don't think the government really thought it through, and future lawsuits will hopefully result in Tornado being un-sanctioned and privacy affirmed as a constitutional right, as it did in the 90s when source code was declared free speech after a long battle https://en.wikipedia.org/wiki/Bernstein_v._United_States
If Tornado Cash had been modified in a way that it could not allow easily to deposit and withdraw large amounts by limiting flow/liquidity it would have been less attractive for Lazarus and other hack group purposes. For example, Harmony One hack $100M was pushed through Tornado in one day.
Tornado Cash has a compliance tool that could allow centralised exchanges and fiat off ramps to trace transcations through Tornado. However, in practice some US political allies, like those in Dubai, run shady OTC desks that do not do it, making Tornado very practical tool for hack laundering.
The best outcome for the situation would be
- Tornado Cash code is ”unsanctioned” or deemed free speech
- Someone builds a service for shielded transactions that has features to discourage its use for nation state scale money laundering
Because the alternative is that the regulators attempt compliance theater and you need to scan your passport every time you do a transaction and then your identity information is being stolen left and right.
But you're right. In this case it won't do much. But it justifies the salary of many bureaucrats. They can play whack-a-mole and no one will think too hard about it, because hey it's hardened criminals they're going after right? The 'moles' will simply scatter elsewhere and those arguing to whack the moles will always have the moral upperhand, so the salaries of the mole whackers will always be secure.
Somewhat tangentially, if it is an official government account, it's crazy to me that they can get away with deleting tweets (and subsequent interactions on those tweets) without an official record.
Tornado cash allows regular people to have private blockchain transactions on ethereum (where with blockchain everything is extremely public otherwise), but at the cost that bad people can also have privacy.
Sanctioning tornado addresses is similar to the export munitions thing with crypto and keys, particularly weird since tornado seemed to go out of their way to build in compliance tooling? IANAL, but there's some strong precedence for speech protections with regard to code.
There are good reasons to want privacy around financial transactions that are not tax evasion or money laundering. This is especially true in the blockchain world where everything is extremely public.
Just like there are good reasons to want private communication even if you're not committing crimes.
No. It's deeply rooted in Greek culture to the point that VAT is basically an optional tax for most entrepreneurs. Virtually nobody at all pays VAT on cash sales in Greece, and there's virtually no enforcement on it, so the only risk of getting caught is if you've pissed off someone with connections.
So everyone does it, and Greece is reasonably stable.
https://www.treasury.gov/ofac/downloads/sdnlist.txt
> Digital Currency Address - XMR 5be5543ff73456ab9f2d207887e2af87322c651ea1a873c5b25b7ffae456c320;
https://localmonero.co/blocks/search/5be5543ff73456ab9f2d207...
It's unclear how resilient Monero will prove to be over the long term but it's certainly looking stronger than centralized coin mixing services.
What this suggests to me is that these services are about to mostly go underground as primarily criminal organizations’ internal services. It’s like running a Tor exit node but worse due to the liquidity requirements: you have to be an incredibly privacy-minded activity with a huge sense of security to link yourself financially to a service which you know will inevitably be used by one of these groups.
An exchange can detect if some Ethereum have been through a mixer very easily. Monero on the other hand has been de-listed or banned from exchanges, making it harder for criminals, scammers, etc to cash out or swapping to fiat.
As soon as the Tornado contract address has been blacklisted and put on the sanctions list, any wallet address interacting with the contract or Ethereum sent from or to it will flag up and get blacklisted by other centralized entities that have AML/KYC checks like Circle USDC, many exchanges, etc.
That's pretty strange since the biggest centralized exchanges do list Monero: Binance, Kraken, Bitfinex.
There is a reason why FTX, Coinbase and Binance.US never listed it in the first place and this reinforces my point that regulators do not want privacy coins to survive.
[0] https://cointelegraph.com/news/kraken-to-delist-monero-for-u...
[1] https://www.nasdaq.com/articles/bittrex-to-delist-privacy-co...
[2] https://cointelegraph.com/news/bitbay-crypto-exchange-to-del...
[3] https://www.cpomagazine.com/data-privacy/south-koreas-new-cr...
[4] https://cointelegraph.com/news/major-south-korean-crypto-exc...
[5] https://www.binance.com/en/support/announcement/61d4510b1ada...
Well, I didn't know. The exchanges listed Monero for me when I accessed them, so I assumed it was the same for everyone everywhere.
https://www.youtube.com/watch?v=macM_MtS_w4
When did XRP blow up? I don't think the SEC is waiting for a rug pull or system failure to sue.
If that's so, why not to after the entities that actually convert X into USD? Tornado only allowed you to trade ETH for Tornado tokens, and vice-versa, no USD involved.
In Tornado Cash I guess the equivalent would "You can hide the flow of your crypto from the public but we're still going to comply with the government AML & KYC."
Nonsense absolutism.
Is that why Stripe, Moneygram, Circle, etc invested in Stellar, and they are still using ISO 20020 compliant cryptocurrencies like those ones after waiting for regulatory clarity in March 2022?
As for why Moneygram invested in Stellar who knows? CDPQ invested in Celsius. Better to ask forgiveness than permission, but as the parent said, lack of enforcement does not mean lack of regulation - and it has no bearing on future enforcement.
Financial services companies take AML compliance seriously because if they don't their liability is practically unbounded and I have to say Moneygram looks nothing like Tornado.
Moneygram knows? Maybe try asking them and others on why they did?
I'm very sure that Moneygram had a wide range choices of other projects to build their product but somehow landed with one serious crypto project that happens to be compatible with the ISO 20022 messaging standard which the current system is using and the Stellar Network has stood the test of time since their launch.
Didn't stop them from actually launching the product with the Stellar Network and for Stripe investing in the project and waiting for regulatory clarity in March 2022 to announce their cryptocurrency services did it?
Why would I ask them? They would never admit to it being a 'shoot first ask question later' play. They would never admit to it being FOMO. They would never admit to it being something they were afraid they'd get left behind on and once they realized it wasn't relevant to their business, sunk cost fallacy took over. They'd never admit to anything that made them look bad. You wouldn't ask Moneygram for the same reason you don't take a criminal's word on not doing crime - there's only downside to telling the truth. I'm not saying it's one of these reasons - but rather if it was they'd never say.
Again, ISO 20022 is completely irrelevant to this conversation. I've genuinely no idea how this became a talking point.
Again, this has nothing to do with AML compliance which I'm confident each of those companies do - and we know full well that Tornado did not.
Again, there's no reason to think that there won't be any future regulatory action simply because there has not yet been any, and I personally doubt any amount of appealing to authority will help.
Is this what you say when someone brings up a refutation towards an absolutist statement about "AML chains" and standards compliance with the current system? Why not confirm your suspicions by asking them directly [0] rather than making more excuses, unless as I always expect from many absolutist critics of crypto especially on this site, that they are all talk and no action; which that is so easy, anyone can do that.
> Again, ISO 20022 is completely irrelevant to this conversation. I've genuinely no idea how this became a talking point.
The reality is and with the many years of these cryptocurrency technologies and projects existing is that only a few of them will survive and as I have mentioned already a few will stand the test of time to be serious enough for companies like Stripe and Moneygram to choose and use projects like Stellar, and those that are compliant with the current system; be it the ISO 20020 messaging standard and have AML compliance, etc will be around for a very long time. So in fact, it is totally relevant to this discussion.
> Again, this has nothing to do with AML compliance which I'm confident each of those companies do - and we know full well that Tornado did not.
Non-compliant projects that enable complete or total obfuscation like Tornado Cash, Monero, etc or any other projects that angers the regulators won't survive and will be targeted and made difficult to use. That also explains why MoneyGram ruled out the privacy coins and chose Stellar for their product. No need to ask them about that.
> Again, there's no reason to think that there won't be any future regulatory action simply because there has not yet been any and I personally doubt any amount of appealing to authority will help.
Now who exactly said that there won't be any 'future regulatory action'?
Given that the SEC is continuously cracking down and enforcing their regulations on many crypto projects this year and with other places like the UK, EU countries following up with their own rules, its clear that the privacy coins, tools, etc are the first to be clamped down since they are already incompatible with KYC, AML checks; hence the importance of waiting for regulatory clarity by the authorities which is exactly what I said in the first place had you read my comment.
Sounds like you are ranting in denial. It's not too late to stop them and get them to admit your suspicions of them in 'FOMO', or 'being something they were afraid they'd get left behind on' or 'being attached to sunk cost fallacy' yourself then: [0] plenty of time.
[0] https://www.crowdcast.io/e/techstars-payments-3/register
Like I said, just talk and no actions. Very common with extreme anti-crypto folks here.
Governments are by and for the citizens. Crypto enthusiasts want to avoid taxes while making profits, because let’s be honest, that’s what Tornado is really about. At best, 1% of traffic is for legitimate services, because you can’t really buy much with crypto except other crypto.
What blockchains enable is yet another class of money laundering. It doesn’t help anyone except the crypto minority, but enables the other bad elements to have another system to use for their corrupt activities. Libertarians in a corrupt classist capitalist society cannot “save” themselves by hiding behind a blockchain - it won’t solve societal ills.
I'm from an older era, and it's continually bizarre to me that, apparently, nearly the entire collective hive mind of "tech" has forgotten that the point of Free and/or Open Source code is that you can spread it around everywhere and get it from different places.
Here on this forum, many people see employment in giant multinational corporations as something desirable. Many of them are primarily motivated by compensation. The site itself is affiliated with the tech startup culture, which every single government in the world has long recognized as important to the economy. And which they have tried to support to the best of their ability. In the world we are living in today, tech startups are probably the most conventional way of trying to get rich.
If you are looking for alternative subcultures, you should try something little less conventional.
* https://sourcehut.org/
* https://codeberg.org/
* https://www.ccc.de/
* https://new.paralelnipolis.cz/
* your local hackerspace or makerspace
the US government tells lots of people to do lots of things.
it told Phil Zimmerman to stop shipping PGP for a while. Debian and OpenBSD refused to do any crypto work in the US at all for like a decade because of this.
it arrested Dmitry Sklyarov for the crime of angering Adobe.
you're conflating "tech hive mind" with "most big tech companies are based in the US for tax/regulatory/staffing/VC reasons and so the US government will kill things that threaten it's goals".
There have always been "tech oriented" people who were iconoclastic anarchists.
In the early days, before CS curricula were as widespread and mature as they are now, a lot more people who knew how to program were self-taught, which self-selects for a much more independent type of person. For what I suspect were cultural reasons (but don't have solid data on), they were also much more likely to be the type of person who is on the fringes of society, in the counter-culture, or at least something of a social outcast.
I honestly doubt that the absolute number of anarchist- and libertarian-inclined "tech oriented" people has dropped since the '80s and '90s. It's just that there are now orders of magnitude more people who have some reasonable amount of tech understanding, many of whom are very much part of the mainstream and unwilling to put their comfortable lives at risk just to stick it to the man.
I'm mid-40s and I do some side contract work and game/Discord with late-20s/early 30's people and folks will be talking about something annoying or unjust, and I'm completely unjustifiably disappointed that no one ever even thinks to mention "hey, we could skirt the rules and just go full hacker on this."
(Note: no one ever do anything illegal, I'm more talking the sentiment than actually inciting naughtiness)
You certainly need not be in the "fringe" or a "social outcast" to object to this state of affairs, which seem to infringe on certain god given liberties (or so we were told). In fact many "dead white men" of excellent repute at the time were rather insistent on these rights. So if demanding our rights is now the condition of the "fringe", the inevitable conclusion is that we live in the gestate state of an emerging tyranny.
Programmers have gotten so weirdly lazy.
Actually I don't think they did, and if they had it'd be a First Amendment violation because the courts ruled that source code is protected speech.
https://www.eff.org/cases/bernstein-v-us-dept-justice
https://en.wikipedia.org/wiki/Bernstein_v._United_States
clearly free speech is not an absolute right in the US, as evidenced by the endless court- and government-sanctioned infringements of it.
so, it's not surprising if another bit is, especially as abstruse as "why can't a company host source code that is enabling money laundering by North Korea"
> The Arms Export Control Act and the International Traffic in Arms Regulations (the ITAR regulatory scheme) required Bernstein to submit his ideas about cryptography to the government for review, to register as an arms dealer, and to apply for and obtain from the government a license to publish his ideas. Failure to do so would result in severe civil and criminal penalties.
> ...the Ninth Circuit Court of Appeals ruled that software source code was speech protected by the First Amendment and that the government's regulations preventing its publication were unconstitutional.
Edit: I did a bit of googling and didn't find evidence that the government told GitHub to do this. Please link if you have evidence ty.
Per the register: "The Register has asked GitHub to clarify its actions or cite the US government order naming these developers as SDNs. We've not heard back."
This implies that they weren't told to do so by the government, but it's all speculation.
I doubt it very much. It is not a violation of the Constitution for the owner of a website to remove user-generated content. It happens all the time and has never been ruled to be unconstitutional.
> ... Cryptographer Matthew Green noted that, but also pointed out the irony of removing code from a distributed, decentralized revision-control system like Git. ...
GitHub != Git. And GitHub is not decentralized in anywhere close to the sense that Git is. I'm not sure where this author is getting their information from, but seems to be just repeating, uncritically, things said on the internet.
First amendment has always applied to government actors not also to companies who are enforcing sanctions.
So if goverment can outsource enforcement of sanctions to private actors then first amendment does not protect anything at all?
If you could, I'd be getting in line to get my fifteen minutes of airtime on the telly.
In a general case, if you are distributing illegal speech, yes. Strangely enough, the first amendment does not protect me speaking, say, a copyrighted work...
Probably the USG would argue that its interest in suppressing terrorist funding and money laundering overrides the 1st Am.
(IANAL/IMHO)
You don't have the right to compel a third party to enable your free speech.
And nothing is stopping Tornado Cash from running their own public Git server.
Sure, but that's not what's going on here.
The USG is compelling all third parties to refuse to provide the sanctioned entities with any services, which includes publishing services.
> nothing stopping Tornado Cash from running their own public Git server.
They will need to find an ISP willing to sell them bandwidth, which may prove difficult.
1) I reach out to all possible sanctioned entities and offer to host dummy content.
2) At some point in the future they become sanctioned.
3) Under threat of sanction I then remove the content.
4) Sanctioned entity files a First Amendment claim to have the sanction invalidated.
This should instead be "sanctioned entity files a first amendment claim to allow the dummy content to be freely hosted on the internet without punishment
Github Inc's speech and expression was chilled because they thought they had liability OFAC sanction. Its not clear if they actually did. But they didn't want to find out.
if you want to have a rebuttal about some other scenario that you think would qualify as chilled speech, that scenario probably does and should also be challenged
I don't see why this case requires constitutional review any more than, say, the concept of copyright.
the first amendment to the constitution does not modify the original constitution, specifically article 1 section 8 of the constitution where by Congress has the power to enact laws to “promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries"
if you think of another analogy let me know
Yes, they do, and none have more flaws than people trying to equate <speech plus behaviour that is not speech> with <speech>.
> the first amendment to the constitution does not modify the original constitution
Where in the first amendment does it say anything of the sort? It's a pretty short one, only one sentence long, but I can't seem to find it.
When two parts of the document contradict eachother, it's not at all clear to me why you are giving precedence to the older one. To me, it seems that the more recent document should be the one that carries more weight.
But if we're going to go with the oldest one, I'd remind us that American law is based on precedents made in English common law, long before the United States was founded. Perhaps we could plumb millenia-old legal cases for precedents that the constitution and its amendments should not be overriding...
And besides, speech is a fundamental human right, far more important than the development of arts and science. You can't have the latter without the former.
Github Inc's speech and expression was chilled because they thought they had liability OFAC sanction. Its not clear if they actually had liability. But they didn't want to find out.
GitHub is not in the business of being legally innovative.
Yes. This isn't what happened. The code isn't sanctioned, the organization is. And these people were affiliated with the organization.
Nobody can say what GitHub would do. But they’d unlikely be under legal jeopardy from hosting it. (They may not want to bother with monitoring whether you continue to develop it or not, however.)
If you continue developing it academically, that’s fine. If you’re developing it to deploy it, that could be problematic. Most people don’t want to deal with customers where they have to monitor that distinction. (Those folks can always just host the code themselves.)
As I understand it, you are free to develop it. GitHub can't stop you from doing that. I'm not sure of your point here.
In this case, while the content of the code might be protected, the activity it embodied violated the rules of multiple Western countries, not just the laws of the U.S.
But... the fact that speech was removed from a platform in obvious response to legal uncertainty created by the government, puts OFAC in serious hot water. When it comes to First Amendment issues, modern SCOTUS decisions have been extremely focused on "chilling effects". And it's near undeniable that Github's removal based on the timing was a consequence of chilling effects created by OFAC action, whether intentional or not.
>It seems clear that mixers are used for money laundering, but many tools, perhaps all, can be used for both good and ill. Typically, however, tools are not prosecuted (or sanctioned), people are.
Just because humans have figured out how to cause harm with something does not mean it should be prohibited. Other examples that come to mind include: Tor, encrypted messengers, knives, guns, automobiles, explosives, cleaning chemicals, recreational drugs, cash, and masks.
> About the concerns, the development of a tool is not prohibited, but if a tool has been created for the sole purpose of committing criminal acts, for example, to conceal criminal flows of money, then putting online/making available a developed tool may be punishable
I guess it all depends on what the bar is on a Dutch court of law to prove that criminal intent, if the developer's defense can successfully argue that the code was made to be generally used for the purposes of privacy rather than made deliberately to be useful to criminals, maybe he can get off the hook.
I'd personally draw the line at providing the service rather than the code itself; if there's any relation to the criminals using the service (e.g. direct payment for the service, kickbacks) that's different from merely putting the code on Github for whoever may benefit from it. The Netherlands goes further it seems.
Source: https://decrypt.co/107648/writing-code-for-sole-purpose-of-m...
They could also be operating nodes in the relay network, in which relay nodes agree to pay for the gas used to withdrawal money in exchange for a fee. The initial developers could quite easily be profiting by running some of these relayers.
* Tor & encrypted messengers: the whole "going dark" paranoia from mid-2010s
* Knives, guns, explosives: mass shootings and domestic terrorists; "nobody needs military style weapons"
* recreational drugs: see the War on Drugs which is really a war on poor non-White people
* cash: see the death of the €500 note
* masks: see the anti-mask laws intended to target the KKK
Note that I'm not claiming that society should never be able to regulate tools. Certainly I don't want the disturbed guy down the street making Ricin in his garage. We should keep in mind though that the tools themselves are value-neutral; it is the people who use them that give them a value.
It's not paranoia if they really were out to get you (and largely succeeded, it seems)
This is not true of something like Tornado which exists primarily to launder dirty money, even if it has fringe legitimate use cases.
I’d bet that there’s a chance a majority of users aren’t breaking local laws, at least if you exclude small scale tax evasion, but it takes an awful lot of people who care enough about privacy to pay extra for it to balance out the $450M USD-equivalent which just one North Korean group is alleged to have laundered. People who care about privacy will use it some of the time if they remember but someone with a lot of stolen money is going to use it every time and that will start to dominate the transaction volume, especially any time gas fees go up and people who don’t need to decide they don’t care that much.
Let's be honest with ourselves. Mixers are used primarily for crypto transaction laundering.
If you are trying to hide a purchase (with your own money) from your wife because you think she wouldn't approve, that's totally ethical (if a bit of a silly relationship tactic). Similar if you're trying to hide a donation to an unpopular politician or charity from your employer. If you're trying to hide a donation to a militant organization, it's much more ethically complex and depends on the goals and actions of the organization. If you're trying to hide the source of ill-gotten money, it's likely unethical.
Separately, while the tool might be "primarily" used for unethical things, that does not make the tool unethical itself. Again it is the actions of the users that determine this. Even if hypothetically 95% of Tor users are pedophiles and ransomware crackers, that does not invalidate the "legitimate" ethical use of the tool by the remaining 5%.
For example implementing KYC and AML processes.
About as true a statement as Tor being primarily used for CSAM, and no-one actually caring about e2e encryption who isn't trying to hide from the law.
Pity the undesirable, lest one day ye be counted amongst them.
Most of those examples are regulated, sometimes heavily.
How can I be violating sanctions as a result of someone else’s actions? I’m not a lawyer, but I imagine one could just argue that receiving an output from a transaction that touches Tornado is considered different from interacting with Tornado oneself.
You'd only get into trouble if the feds see a large, ultimately untraceable transaction from your crypto accounts prior to the "gift," in which case you'd have to explain to their satisfaction why you had a large untraceable transaction followed shortly by the recipient of tumbled crypto. (It's doable, you just have to be able to explain it.)
Actually I think the v1 contracts did not require or accept a fee for usage. I'm not sure about their v2 contracts which incorporated some sort of governance token called TORN.
> Because the deposits and withdrawals are not synchronized in time, users can break the link between a particular chunk of cryptocurrency and their holdings.
This is not false, but a bit misleading. Being decorrelated in time helps against analysis that tries to match inputs and outputs, but it's not what breaks the link.
On withdraw, how does the service know that the user has a claim to the funds? A centralized service can store this in a database off-chain, but Tornado is permissionless, there is no third party database, only the smart contract. If you would store it naively on-chain, the link would be public, defeating the purpose. So instead, Tornado uses zero-knowledge proofs that allow users to prove that they have a claim to the funds, but nothing more than that. Crypto (in the original meaning of the word) is what breaks the link!
But you can use the Tornado Cash pools themselves without the relayers.
Can someone smarter than me talk about how we might judge the mens rea and criminal intent of the developers?
Tornado Cash also did not comply with the OFAC list of known sanctioned wallets.
However, it's clearly not that simple, from the article:
> "If Tornado Cash knows who deposited the money and who took it out, that’s not money laundering."
> "Smart contracts are not legal contracts."
> "Every service provider has a certain amount of illicit activity."
https://www.coindesk.com/business/2022/01/21/is-tornado-cash...
I also object strongly to Tornado Cash being "designed" for illegal activity.
This the root of your misunderstanding: his paycheck is not in any way coming directly – note how your very next sentence directly contradicts this assertion – and criminals paying some taxes like everyone else doesn’t mean that the purpose of the tax is criminal, and nobody working on the project thinks their goal is to facilitate crime.
Tornado Cash’s design does not comply with legal requirements in many countries. Until that changes, it’s going to be seen as a tool for breaking laws because that’s what it does by default.
>Tornado Cash’s design does not comply with legal requirements in many countries.
As far as I know there were plenty of legal reasons for many people to use Tornado Cash, probably even Americans (up until it was sanctioned). One example is a legally owned "cold wallet" being firewalled from a hot wallet. It's not wrong to create something that may be used illegally some (or even most) of the time or some of the places.
>his paycheck is not in any way coming directly – note how your very next sentence directly contradicts this assertion –
If that's your assertion, then the person selling gasoline to the mobsters is culpable then, knowing that mobsters buy gas and knowing that gas facilitates crime, but doing nothing to specifically check if someone is a mobster before selling the gas.
> purpose of the tax is criminal, and nobody working on the project thinks their goal is to facilitate crime.
But that's precisely my point as well. You can operate or design a mixer without the goal of facilitate crime, even with the knowledge it will. The purpose of profiting may be to profit off of legitimate users using the mixer, and the unfortunate byproduct is bad people sometimes use a service for ill despite you not intending for that to happen. Now I can't prove intent, but I doubt you can either.
>paycheck is not in any way coming directly
A second point -- your problem is that it went directly and not through an intermediary? OK, so it would have been fine if a cousin or whatever set up a shell company and then paid them through the shell company, then it would be indirect. I don't buy that an extra layer of indirection somehow makes it better. Mobster paying tax (or shell company) and that tax (or shell company tranfer) going to you is a mobster paying, with an extra step. I mean Tornado cash is doing an analogous thing to what's happening with tax money -- the users may or may not be doing illegal things but the people getting paid out of the 'mixer' of the tax treasury are getting a mix of good and mobster money. You could argue taxation is in part just a way of money laundering to profit off of mobsters and crimes.
Of course the difference here is with tax money, there really is the provable intent make money directly from crime. Even if someone informs the IRS their source of money is criminal in the same envelope the money is in, IRS will happily take 100% criminal money with full intent for the coffers to directly profit off the crime.
(Given the sanctions concern US citizens only, I really can't understand just why there did not any alternative web interface for the rest of us pop up)
[1] https://twitter.com/brian_armstrong/status/15600168272535511...
There is a much deeper contradiction between cryptocurrency and the free software movement of which LWN is an outpost.
The goal is to keep software free of the bonds of scarcity inherent in physical goods. Because digital goods are virtually free to copy, they can only be limited by typical systems of ownership when artificially forced to. Software spread openly is better able to help everyone rather than just a few capitalists. Private industry has fought against this in its drive to grind profit out of everything it can.
Cryptocurrency is an effort to dig artificial scarcity deeper into digital goods than ever before. So it's strange to see FOSS advocates getting crypto's back. The people driving the spread of crypto are zealous advocates of a system inherently opposed to FOSS ideals. Like many before them, they will push software freedom to the extent that it helps them and then relentlessly pursue its enclosure when it doesn't.
It's absolutely true that a vast majority of crypto projects revolve around the idea of artificial scarcity, leading to a disgusting commodification of absolutely everything. However, and ironically enough, code is the one thing that crypto cannot commodify, which is what FOSS cares about.
i agree. but for many in this community there’s also a contradiction to physical enforcement of some external value system onto someone operating in this open space.
if the surface of FOSS is something like “freedom to use, inspect, and modify the code you interact with”, then below that iceberg is many different thoughts on how that’s preserved. at the very least, there’s a camp that thinks freedom of association underpins this. “FOSS as a community and ideology can exist because its members are free to pursue that own goal of theirs. cryptocurrency isn’t contradictory to the underpinnings of FOSS, because the people who freely participate in FOSS for ideological reasons will freely choose to not embrace cryptocurrencies.” — is one possible voicing from under that iceberg.
here on the net we’ve enjoyed quite a few years of being able to build whatever we want, largely free from the forces felt in whatever physical society we come from. yes, there’s been things like the arms control of RSA, the DVD decryption key being made illegal to spread, and so on. those also came with plenty of meta-discussions like this one, and since then we’ve enjoyed a good decade where most of us really do feel free to build.
FOSS exists, among many other communities, because we’re operating within a larger sphere which doesn’t impose any one universal set of values. my worry is that we see an external value system be imposed on this underlying fabric. what are the odds this system will share my values? or be compatible with the values from which FOSS may emerge, for that matter? where then will i go but back underground?
Cryptocurrencies are fundamentally a means of creating a decentralised digital scarce resource, and the Bitcoin blockchain is a rough proof of concept that it is theoretically achievable, albeit using a spectacularly inefficient method.
Artificial digital scarcity is the whole point.
Since we as a society require money to transfer and preserve value, the money being open-source, decentralized artificial scarcity(like Bitcoin) does not contradict with FOSS ideals. On the contrary, it widens them from a technological sphere to economics.
No it isn't. You are describing the 'Open Source' movement which is the scam that the tech bros ran with to popularise and to get around the issues in the free software movement; which the latter has been a total and abject failure.
As soon as their own tools have been used by scammers, criminals, etc have always turned out to be for the ideals that they have fighting against; which is against the development of opaque, non-free surveillance software used against the general public created by governments, big tech, and the like. Both the free software and open source movement have hand in hand made no difference in stopping the surveillance and spyware that is proliferating today.
> The people driving the spread of crypto are zealous advocates of a system inherently opposed to FOSS ideals. Like many before them, they will push software freedom to the extent that it helps them and then relentlessly pursue its enclosure when it doesn't.
Yes. This is exactly the reason why 'free software' is a total failure and did nothing to stop the rise of cryptocurrencies which will advance more surveillance.
It is not a fundamental freedom nor human right to be able to anonymously transfer money.
Nor do you have a right for your code to be hosted at Github.
I wish people would stop demeaning the real threat to human rights happening across the world.
I'm old enough to have experienced a largely cash-based society that was also virtually without any tracking. The government would know you exist, your school/work, and pretty much nothing else.
The default was freedom, and it being up to the government to prove you're malicious, not the other way around.
What I do in my private life and whom I transact with is my business, and not that of the government or 5,000 companies. If you think I'm cheating, come with a well documented warrant based on evidence.
That was the mentality. Now we're cheering as we're accelerating into a digitized, centralized super authority that can wipe you out, or even an entire category of people, with the push of a button.
You can't do that with cash. You'd have to actually visit thousands of people, do research on all, obtain a warrant, arrest them, process them, etc.
All of this is absolutely about fundamental rights. I have no need for any mixers, but the attitude "guilty until proven innocent" isn't very pro-freedom.
Cash bills have had serial numbers for decades. The Western governments have had the technical ability to track cash transactions for decades.
So that would be the 80s. My dad got paid in cash. You spent in cash. You give cash to friends, family. None of it was tracked.
The government had no idea how much cash you had. Nobody had any idea what you spent it on or whom you gave it to.
Absolutely unhinged to bring "white" into this. The entire world ran on cash decades ago. Especially in the developing world this is still partly true today. What exact point are you trying to make?
Do you even know how a serial number on cash works? It doesn't tell you anything about transaction history as those are not logged. Even if you did do that, payments are anonymous so you can't track it back to a person. There were no cameras.
The point of a serial number on cash is not tracking, it's flagging. When a bank got robbed and you know the serial numbers of the bills, you can monitor if somebody spends them.
On the other hand, if he really did use cash for everything, you could do the same thing today. Nothing has changed on that front.
Since then, some of the fines for violating currency reporting have been adjusted for inflation. But curiously, the reporting cut off was not inflation adjusted and remains at $10,000.
In 1970, thus, a 'large' transaction was one that exceeded the median family annual income. In 2022, a 'large' transaction is a beat up honda civic.
That was the same for pretty-much everyone in Australia until the 90s, when we started to get paid directly into bank accounts. But, I worked at a bank at that time, and I can tell you that our tellers and ATMs didn't track serial numbers then either: we had no record of which bills went to which customer.
And that was true regardless of your age, gender, religion, ethnicity, etc.
I appreciate that this has probably changed since then, but ... that's kinda the point: it used to be private.
I'm sure that shit gets automatically recorded every time it enters the bank now, along with any automated machines you use, so a completely off the cuff guess for me is 30% of cash transactions today may have their serial numbers recorded. Not quite as bad as bitcoin, but probably often enough it's easy enough to trace back to you.
And for the most part, minorities using large amounts of cash were always subject to additional requirements to "prove" their identity and the provenance of the money. The legacy of this is that banking amongst minorities is a lot lower, especially in the black and Latino communities.
So? I still want to be able to do it, as I can with physical cash.
Besides, "fundamental freedom" and "human right" are semantic social constructs — what counts or not is quite malleable from polity to polity. Actual rights are natural rights, as in things that no one can realistically stop you from doing (suicide is perhaps the best example as the extreme of bodily autonomy; free speech somewhat falls into this category but it gets political as soon as there are publishing media involved beyond literal vocal speech)
wow... That is a take I will say that, the entire foundation of the American constitutional system is based on the idea of natural rights but sure it is all laughable
>Humans have always had to fight for their rights
of course... I am not sure how that is a rebuttable to the concept of natural rights. Nature is violent place in it natural state...
>Democracy is the form of government where the fight is done at the ballot box
Democracy is 2 wolves and a lamb deciding on what is for dinner.
A Constitutional republic gives the lamb power over the 2 wolves.
> Seems pretty clear to me that the American people do not believe money transfer systems without AML/KYC are a right that people have.
This is probally the most laughable line in your entire comment, do you honestly believe every law ever passed by the US Congress, or State government enjoyed majority support at the time of its passage
Really?
For decades now the "American People" by HUGE majority support has wanted to legalization of weed, last I checked that is still illegal
Although I believe natural rights aren't real, they are a very useful concept to convince people of. If you're able to get people to believe "life, liberty, and the pursuit of happiness" are somehow fundamental makes it much less likely for them to take those things away from others. So although the founders were wrong in a literal sense, their ideas did immeasurable good, so I do have a lot of respect for them.
> A Constitutional republic gives the lamb power over the 2 wolves.
Republics are still democracies, especially in the way that matters here. A system of government that is beholden to the vote of the people. There would be nothing wrong or unnatural about everyone deciding property rights no longer exist and voting to seize the means of production. We make our own rights.
https://www.pewresearch.org/fact-tank/2019/11/14/americans-s... doesn't support your marijuana stance. Decades ago the american people by HUGE majority wanted weed illegal. As that changed it became legal, which it largely is today in places that want it to be. You can certainly get into federalism versus local government here, but what matters is that we are creating our rights as our stances changes, just as we have for our entire history.
no, Constitutional Republic differ in one HUGE way, they disallow the majority some power. Every one should reject the concept of Majority Rules. That is a TERRIBLE way to organize society and leads to all manner of abuse.
Majority power needs to be check with natural rights that can never be violated for any reason.
>>A system of government that is beholden to the vote of the people
This is an incorrect statement if you are talking about the Federalist system of government created by the founder of the US. it is much more complex by design than a simple majoritarian democracy. People with a similar world view as yours have been working for 100's of years to dismantle the republic and replace it with a more majoritarian system, leading to all kinds of problems, including the massive division we see in the nation today.
>There would be nothing wrong or unnatural about everyone deciding property rights no longer exist and voting to seize the means of production. We make our own rights.
There would be lots wrong and immoral in doing that, you seem to believe in the concept of "life. Liberty and the pursuit of happiness" well that is based in the principle of Self-ownership, one can not own themselves without the ability to trade the product of their own body freely with others. "Collective" ownership of "means of production" means the collective also owns the output of the labor, and in effect owns you the individual, you cease to be a single person, and become "one of us"
Take anarchy. What rights do people have? None. Because there are no natural rights, only the legal ones we create for ourselves. In our system our rights stem from the will of the people. Not the hand of god. Nor the universe. If the people elect a government on the basis of granting or removing rights that's what the government will do.
If there are no natural rights, then it would not be unethical for a government to infringe upon those rights, Thus says a China or North Korea or Russia are perfectly ethical governments because the government has choose their citizens do not have X rights and that is in their authority to do has a government.
Instead the founding principle is "we hold these truths to be self evident" this is a foundational principle, and Philosophy of natural rights. Rights that no ethical government can violate even if the will of the people was to "agree" to the infringement.
Authoritarianism is the belief that governments are the all powerful, and people are subservient to the government, and government bestowed up on the citizens their rights, I reject Authoritarianism completely and with out reservation
Pointing out that government can be instituted that would infringe on natural rights is not proof that natural rights are non-existent
The natural rights thing is more of a thought experiment: first, imagine there is no government. What do people have? What’s the “state of nature?” This was a pretty radical idea in Hobbes’s time. So it doesn’t make sense to believe a thought experiment isn’t real. Like, it’s a thought experiment. Discussing which rights exist within the framework is the thought experiment.
Then social contract theory is like okay, why should anybody give this up? What do they gain? Large groups of people don’t just do stuff for no reason (supposedly).
Democracy means power comes from the common people, not necessarily voting. E.g. Athenian democracy selected officials at random.
People have whatever they can take for themselves, a.k.a. nothing. The base state is that people have no rights at all. Rights are nothing but an agreement among society that if everyone follows these rules things will be better. That agreement can change at any time.
These two personality types often clash harshly, because one sees society as having no right to interfere with his rights and the social rights person sees the dissenting individual as having no right to abstain from the "social contract" that they at best agreed to merely by being born and remaining in the boundary of many members of that society.
In the earlier days, the US was far more individualistic, at least in the Western territories. There was some hope for the more individualistic rights leaning individual. Now I'm not sure what our last bastion of hope is from persons who don't recognize us as having any rights without dear government.
Maybe it's just because of the area I grew up in, but nearly everyone I know that is from outside the city or government circles is strongly against AML/KYC. I'm nearly certain if you took a democratic vote of everyone in the US they'd vote against AML/KYC. Same goes for TSA, yet somehow they still exist.
Making multiple transactions of $9999.99 is possible, but it does invite perhaps unwelcome scrutiny.
Why not money?
Like, lol, what?
You can't publish someone else's book, or nuclear weapon plans, or a credible murder threat
"But code is free speech?"
One, it's speech, not free speech. They're not the same thing and the linked decision doesn't say what everyone's claiming it does.
Two, freedom of speech doesn't mean you can't be punished for what you say. Go try yelling fire in a crowded theater, and try to plead freedom of speech. Watch what happens.
Three, they're not being punished for the speech, they're being punished for defying monetary controls. Just because there was speech adjacent doesn't mean anything.
We should be able to see through things like this.
Just because it's on the blockchain, doesn't mean people aren't ultimately responsible. People chose to develop Tornado Cash, they chose to deploy it to the blockchain, and they chose to run the contracts. And now everyone involved in Etherium has to deal with this sanctioned code touching everything in that space.
Just because it's on the internet, doesn't mean ISPs aren't ultimately responsible. People chose to route internet packets, they chose to build and manage data centers, and they chose to run the service. And now everyone involved in the internet has to deal with this sanctioned information flowing with everything in that space.
Clearly, we need to require all IP packets to be transmitted only from people and entities who are registered with the government so we can censor any bad data from being transmitted. Otherwise, illegal information might flow.
I heard the Chinese government has a great implementation of this.
The US Treasury is so far removed from the SEC that I don't really understand