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Arrest of suspected developer of Tornado Cash

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Re: Arrest of suspected developer of Tornado Cash

#121

Post by Jensson »

biglearner1day wrote: post #118
Jensson wrote: post #99

Earlier quoted context omitted.

Yeah, but then they would imprison the CEO and not the developer. Very different, especially since it is easy for CEO's to say that they weren't aware of any criminal activity. A developer who directly develops the feature is much easier to blame.

> Yeah, but then they would imprison the CEO and not the developer. While they do get blamed, the Netherlands doesn't seem to care all that much. They seem very selective with how they react to supposed money laundering https://www.reuters.com/article/us-ing-groep-settlement-mone... https://www.dw.com/en/how-ing-bank-in-poland-helped-russians...

They key difference is this:

> ING’s Chief Executive Ralph Hamers said no individual at the bank was found to be responsible for the failures

Closed source means it is easy to hide whose fault it was, and then all you can do is fine the company since you can't arrest everyone. This is also why companies are so keen on deleting old message logs etc, to avoid leaders going to prison.

Re: Arrest of suspected developer of Tornado Cash

#122

Post by pjc50 »

biglearner1day wrote: post #106
ABeeSea wrote: post #92

Earlier quoted context omitted.

If you are told repeatedly that your work is facilitating money laundering and you keep doing that work, don’t be surprised if you get arrested for facilitating money laundering.

Please do remind me how many persons named in the Panama Papers have been arrested, or had their assets seized.

You could do your own research? https://en.wikipedia.org/wiki/Panama_Papers

I see at least https://www.icij.org/investigations/panama-papers/20160425-c... and https://www.justice.gov/usao-sdny/pr/four-defendants-charged... ; the originators of the scheme, Mossack Fonseca, are wanted by multiple countries https://apnews.com/article/arrests-tax-evasion-panama-city-p...

Jurisdiction is something of a problem, as we can see with the Panamanians being non-extraditable. That's why it was the Panama papers in the first place! But if you're going to facilitate money laundering, at least have the common sense to not do it under your own name in a jurisdiction where that is illegal or that will extradite you to the US.

Re: Arrest of suspected developer of Tornado Cash

#123

Post by PeterisP »

hansvm wrote: post #100
closewith wrote: post #61

Earlier quoted context omitted.

Anonymous cash transactions in the Netherlands over €10,000 are already illegal ( https://www.amlc.eu/cash-limit/ ). The government intends to ban cash transactions over €3,000.

The way I read that, large anonymous cash transactions in a non-professional capacity are still fine? Could I not gift somebody a million cash euros or buy a home with cash?

IIRC you can't buy a house anonymously in Netherlands, no matter if you pay with cash or not, you'd be required to register the transfer of ownership in the cadastral system, and any real estate deals must be with a written contract that identifies both parties.

And I believe the NL tax reporting for large gifts also requires you to identify the donor.

In essence, the limitation is not on the method of payment but on the core activity, that any significant income from contracts, deals, trades, barters, transfers, gifts, settlements etc need to be non-anonymous in order to be legitimate, so if the method of payment does not identify the payer (i.e. cash) then simply it's your duty to identify who you're dealing with, from whom you are earning money.

Re: Arrest of suspected developer of Tornado Cash

#124

Post by closewith »

hansvm wrote: post #100
closewith wrote: post #61

Earlier quoted context omitted.

Anonymous cash transactions in the Netherlands over €10,000 are already illegal ( https://www.amlc.eu/cash-limit/ ). The government intends to ban cash transactions over €3,000.

The way I read that, large anonymous cash transactions in a non-professional capacity are still fine? Could I not gift somebody a million cash euros or buy a home with cash?

When buying a home, the transaction has to be reported anyway irrespective of value. The same is true for gifts.

The Dutch Government also asked for a blanket ban on cash transactions above €5,000 to be included in AML 6/7 (although there wasn't wide support).

Re: Arrest of suspected developer of Tornado Cash

#125

Post by dutchbrit »

Andrew_nenakhov wrote: post #89

A message is circulating in russian crypto groups, that two more developers were arrested: Roman Panchenko in Seattle, and Nikita Dementyev in Tallinn. (I can't verify the veracity of this report, but if true, this looks like it was a coordinated international police operation)

Roman Panchenko, interesting.. he also lives in Amsterdam according to LinkedIn. Also, both the names you mention, their Instagrams have both been taken offline.

Re: Arrest of suspected developer of Tornado Cash

#126

Post by whatisweb3 »

paulsutter wrote: post #10

There’s a big legal distinction whether the developers are collecting fees from operation of the service, since that’s very different from merely developing open source software. I’m curious how this develops > It is suspected that persons behind this organisation have made large-scale profits from these transactions.

By this logic every blockchain developer should be arrested. The TC developers are not collecting fees directly, but they probably did give themselves a large supply of tokens to maintain control over the protocol, since the tokens were designed for governance.

You can name any blockchain and see the same pattern. You can name many applications on top of blockchains, like Uniswap, and see similar. All of these protocols are known to facilitate some amount of illegal activity. Does this mean all developers of these protocols should be charged?

Re: Arrest of suspected developer of Tornado Cash

#127

Post by closewith »

biglearner1day wrote: post #70
closewith wrote: post #61

Earlier quoted context omitted.

Anonymous cash transactions in the Netherlands over €10,000 are already illegal ( https://www.amlc.eu/cash-limit/ ). The government intends to ban cash transactions over €3,000.

> Anonymous cash transactions So not crypto.

The law also applies to barter with equivalent Euro thresholds, so cryptocurrencies aren't excluded. Anyway, the point stands, financial privacy (from the State, at least) is not a feature of life in the Netherlands (or anywhere in the EU, with AML3/4/5/6).

Re: Arrest of suspected developer of Tornado Cash

#128

Post by whatisweb3 »

My comment from 2 days ago:

> The US sanctioning Tornado Cash and the resulting repercussions is deeply concerning. Whether or not you like crypto, you should not be supporting this if you are a researcher, academic, technologist, cryptographer, or privacy advocate. The code for Tornado Cash is a series of cryptographic and mathematical functions that can be repurposed for a variety of applications unrelated to privatizing user wallets. The protocol itself is designed for one reason: to give users privacy through end to end and zero knowledge cryptography.

> Allowing it to remain open source and accessible as a tool for blockchain privacy and codebase for cryptographic research is a net benefit for the entire world.

> A comparison would be that US decides to sanction the open Matrix protocol along with any user, developer, source host, or sponsor that has ever contributed to it in the past - because it can facilitate end-to-end encrypted terrorist communication.

Discussion:

https://news.ycombinator.com/item?id=32404966

Re: Arrest of suspected developer of Tornado Cash

#129

Post by paulsutter »

whatisweb3 wrote: post #126
paulsutter wrote: post #10

There’s a big legal distinction whether the developers are collecting fees from operation of the service, since that’s very different from merely developing open source software. I’m curious how this develops > It is suspected that persons behind this organisation have made large-scale profits from these transactions.

By this logic every blockchain developer should be arrested. The TC developers are not collecting fees directly, but they probably did give themselves a large supply of tokens to maintain control over the protocol, since the tokens were designed for governance. You can name any blockchain and see the same pattern. You can name many applications on top of blockchains, like Uniswap, and see similar. All of these protoc…

No this means that you should talk with a serious law firm before you start one of these projects. OFAC, KYC, securities, AML/CFT, so many laws apply and without expert advice you can end up in a bad spot

Expert lawyers do exist, example:

https://www.perkinscoie.com/en/professionals/j-dax-hansen.ht...

"Dax has advised and continues to work with many of the leading companies, industry associations and consortia. Projects include U.S. and international digital currency exchanges, vaulting and custody solutions, bitcoin kiosks, tokenized gold and commodities, decentralized exchanges, autonomous smart contracts, stable coins, and Non-fungible tokens (NFTs). Beginning in late 2016, Dax worked with his colleagues to apply a new level of legal counseling to established software projects undertaking token sales related to decentralized applications (DApps) and distributed protocols..."

Re: Arrest of suspected developer of Tornado Cash

#130

Post by ziddoap »

phphphphp wrote: post #88
agotterer wrote: post #15

Earlier quoted context omitted.

By that logic why haven’t the developers of Metasploit also been arrested? It’s hard to argue that the behavior of the software isn’t/couldn’t be used for nefarious purposes and to commit crimes. Anonymizing spending on it’s own is not a crime. Clearly the line is crossed if the developer is promoting the use of the software for illegal purposes. I’m only vaguely familiar with Tornado cash, was that the case? If not,…

Software doesn’t come to be through immaculate conception: the authors created it, knowing it could be used in this way. If a company releases software that is used nefariously, there are very common legal actions to hold them accountable. For example, Facebook has extensive legal obligations to meet to do with behaviour on their platform. I am not arguing that tornado cash should be illegal (or that encryption shoul…

>I am arguing that people are responsible for the software they have created.

So, is your answer to the asked question yes, the developers of Metasploit should be arrested and jailed?

How about the developers of Bitlocker? It's used to encrypt illegal content, impeding police discovery efforts. Every person who developed a file-sharing website should probably also be arrested. Lots of illegal/pirated/etc. content out there.

The point being that almost every software on the planet can potentially used for malicious and illegal activities. Seems like if we indefinitely held developers responsible for what other people do with their software, the smart person would never develop any software.

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