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Arrest of suspected developer of Tornado Cash

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Re: Arrest of suspected developer of Tornado Cash

#201

Post by jeroenhd »

This is an interesting case because it's applying financial law to a decentralised cryptocurrency operation. If research shows that Tornado was indeed processing a billion dollars of criminal funds then I'm not surprised arrests have been made even though it may be hard to prove actual involvement by the network operators. These numbers come close to the fund processing capacity of a small financial institution and there are

The points about DAOs are also interesting. DAOs have no central authority or elected leadership. Setting up a DAO should not be enough to get out of legal responsibilities of running a financial institution, but people voting in DAOs also shouldn't be treated like CEOs because they have very little actual power.

Conviction in this case might have a serious impact on decentralized crypto schemes. DAOs are a great technical workaround for not having a direct kind of leadership but the real world doesn't care about fancy technical solutions. Someone sets up a certain system and that someone has the responsibilities that come with setting up such system. If that service a free website, the responsibilities are extremely limited; if that service is a financial institution, your responsibilities become more serious.

Re: "this is just a dev", the dev also presumably ran the software they created, and with a seventh of the processed volume being criminal funds, it's almost sure that they operated on dirty funds at some point. Even if the developer's role in the (suspected criminal) DAO is considered insignificant, this might make the dev a money mule as he temporarily stored stolen funds in their crypto wallet. According to Dutch law, money mules may be prosecuted as complicit with fraud and any other financial crimes that take place.

One might defend the cryptocurrency operators by claiming that they can't verify the identities of their customers to comply with money laundering regulations, but that only underlines the illegality of the system: if your system isn't capable of complying with the law, you shouldn't operate such a system. It's like claiming you don't need seat belts in your cars because you can't figure out how seat belts work: your lack of control or creativity is not society's problem.

With how overloaded the courts are, it'll take months or even years to see the impact of this arrest. Whatever the outcome, it'll have a big impact.

Re: Arrest of suspected developer of Tornado Cash

#202

Post by elefanten »

game-of-throws wrote: post #183
clucas wrote: post #161

Earlier quoted context omitted.

If the international law enforcement community is really trying to go after "all cryptographers" why do you think we haven't seen more arrests? Why do you think they only arrested this guy? I get that you really want to defend crypto, but I think a simpler explanation is that they have good reasons to believe that this guy was doing more than just the stuff you're trying to defend (making privacy code). It would be l…

If that were true, it would be so easy for them to swing public opinion in their favor by saying so. Headline: Arrest of developer with suspected ties to North Korean money laundering Body: He has also previously contributed to Tornado Cash. But all we know is what they decided to tell us... he's a developer of privacy tech. If the facts change, I'll change my mind.

There have been a series of previous stories about North Korean state hackers using it to launder proceeds from known hacks.

This didn’t happen with no lead up or context

Re: Arrest of suspected developer of Tornado Cash

#203

Post by JumpCrisscross »

dannyw wrote: post #193
JumpCrisscross wrote: post #191

Earlier quoted context omitted.

> People don't seem to realize that there is little fundamental distinction between a crypto privacy service, and encrypted messaging apps like Signal and matrix A dollar in a bank account is similarly abstractable. Anyone equating crypto to speech is undermining actual privacy rights.

There's a distinction, you can't transfer a dollar in a bank account by sending text messages. You could instruct your bank to transfer; but the actual irreversible _movement_ happens out of band. You _can_ transfer a cryptocurrency by sending its private key on an encrypted messaging app. What happens if someone makes a mixer that operates over Signal messages? This is not a bad-faith argument: The entire CoinJoin p…

> What happens if someone makes a mixer that operates over Signal messages?

Honestly, if someone just develops a mixer and publishes the code they’re probably fine. That’s speech. GitHub or a journal, it is protected.

Tornado’s developers didn’t do that. They made a token that with monetary value that they get paid; they hired people and had a website promoting the service; et cetera. If this were just a GitHub repo, yes, the comparison to speech would be apt. It’s not. And I’m none too thrilled about folks throwing actual free speech and privacy under the bus to defend crypto.

Re: Arrest of suspected developer of Tornado Cash

#204

Post by JohnHaugeland »

whatisweb3 wrote: post #113
alkonaut wrote: post #93

Earlier quoted context omitted.

> Wow, just wow. Am i alone in thinking this is not going to fly if all he did was write some software that helps with your financial anonymity? There must be more. Perhaps he also deployed it? That would be a different story. Does that really make a difference? I’d not worry about writing anything and putting it online saying “this can be used for evil so don’t do that”. But if I was approached by a criminal who ask…

This is not a criminal hiring a contractor to work on Tornado Cash. It is an open source project on GitHub that many developers and researchers contributed to, in the interest of privacy. To use an analogy, see the open Matrix protocol, a tool for privacy that can facilitate encrypted communication between criminals.

You seem to believe that if a tool is illegal, as long as it's open source and the people making it don't have a criminal background, and as long as you call it something like "privacy software," somehow it's suddenly not illegal

But this is a tool whose specific purpose it is to make it difficult to track illegal transactions. Of course this is happening.

Programmers get way too wrapped up in "but I called it open source! I called it privacy software!"

What you label it has no actual power here. It was used in illegal behavior and that appears to be its goal.

Of course it's going away.

Re: Arrest of suspected developer of Tornado Cash

#205

Post by suoduandao2 »

JumpCrisscross wrote: post #189
suoduandao2 wrote: post #173

Earlier quoted context omitted.

In my capacity of unofficial spokesperson for the hype mob, I would say that if a tool can be created that has legitimate and nonlegitimate purposes, criminalizing its creation or possession is the worst possible action to take, because it ensures that all talented people who are interested in developing it for legitimate purposes become disaffected at worst or aligned with your enemies at best. Setting aside the mor…

> criminalizing its creation or possession is the worst possible action to take Sure. That’s not what’s happening. Tornado was used illegally. Its leadership kept developing it, kept getting paid, and made no apparent course corrections. This wasn’t simply a GitHub repo; it was a remunerated enterprise. When I’ve brought up the legal issues around mixers, a common response involves the impossibility of governments to…

Justifiable by what, exactly? International trade in a multipolar world requires a money supply that no single government can arbitrarily enforce its will on. Is the argument that every government should have an unchecked ability to enforce its will on the medium of exchange?

Re: Arrest of suspected developer of Tornado Cash

#206

Post by jeroenhd »

biglearner1day wrote: post #97
ABeeSea wrote: post #94

Earlier quoted context omitted.

Helping criminals launder money is not a human right.

I would challenge you to prove that they actively advertised their service as such. Stop spreading misinformation.

Being a money mule makes you complicit in fraud or financial crimes. Running cryptocurrency code and using your own cryptocurrency wallet to help launder stolen money is a crime. People are expected to know better than to lend their wallet for "temporary storage" of money for a reward, especially if they don't know who the source or destination of the transaction may be.

No company will advertise themselves as a criminal operation, even the dumbest thieves aren't that stupid.

Re: Arrest of suspected developer of Tornado Cash

#207

Post by catchclose8919 »

dannyw wrote: post #155

For those who think this is good: Private keys can be represented in text. Like this: KwTHJw865SLeTAjK7otYb5bL5mwutBb2vDxxF7kGf5XvY7QttnvM Encrypted messaging apps like Matrix or Signal, can be used to send strings with private keys, anonymously. It's very difficult to hold a position that financial privacy tools are bad, but encrypted messaging apps are good; because they are really not that different.

Ppl work hard to make sure they remain different for 99.9% of non-technical people (eg. banning anonimous cryptocurrency)... once this is done, you become and outlier by using different tools than average people, and special means of surveilance can be deployed against you personally at much lower cost...

Ofc this is bad, but the bigger purpose is always "power over the proles".

You can let most people have most of their privacy as long as you don't touch the "power distrubution tools" (money) - eg. if messaging is private, but money is on a blockchain where all wallets are mandatory to have an associated human identity, it doesn't matter that some sketchy transactions happen on the edges. Bitcoin would be targeted too if it were used to eg. pay wages and fund companies on a large scale.

Probably Tornado Cash enabled some activity that was large scale enough to not be considered just "on the fringes" anymore...

Re: Arrest of suspected developer of Tornado Cash

#208

Post by JohnHaugeland »

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.

So far about 1200, including 400 celebrities, three heads of state, nine former heads of state, and 150 sitting politicians worldwide.

It's the third largest successful corruption sting in history.

Also, edgelords online who don't know what's happening in the real world like to pretend there was no fallout, so that they can feel wise about corruption, and like to demand that other people look things up for them so they can feel like they made a point.

In reality, it was about half of the names in the document base so far, and that's despite it being international prosecution with an unwilling nation.

Things in the Panama Papers are going quite well for law and order, albeit slowly.

Would you be kind enough to tell us what result you were expecting, and what point you were trying to make?

In the future, would you please consider knowing the answers to your sarcastic questions before asking them, please?

Re: Arrest of suspected developer of Tornado Cash

#209

Post by JumpCrisscross »

suoduandao2 wrote: post #205
JumpCrisscross wrote: post #189

Earlier quoted context omitted.

> criminalizing its creation or possession is the worst possible action to take Sure. That’s not what’s happening. Tornado was used illegally. Its leadership kept developing it, kept getting paid, and made no apparent course corrections. This wasn’t simply a GitHub repo; it was a remunerated enterprise. When I’ve brought up the legal issues around mixers, a common response involves the impossibility of governments to…

Justifiable by what, exactly? International trade in a multipolar world requires a money supply that no single government can arbitrarily enforce its will on. Is the argument that every government should have an unchecked ability to enforce its will on the medium of exchange?

> International trade in a multipolar world requires a money supply that no single government can arbitrarily enforce its will on

Do we have such a money supply? If not, do we have international trade? Is the world not multipolar?

This claim fails on face value. Most of history was multipolar, international trading and reliant on money states de facto controlled. (You’re not moving tonnes of gold without the state’s permission and not being chased by them.)

Re: Arrest of suspected developer of Tornado Cash

#210

Post by PeterisP »

whatisweb3 wrote: post #113
alkonaut wrote: post #93

Earlier quoted context omitted.

> Wow, just wow. Am i alone in thinking this is not going to fly if all he did was write some software that helps with your financial anonymity? There must be more. Perhaps he also deployed it? That would be a different story. Does that really make a difference? I’d not worry about writing anything and putting it online saying “this can be used for evil so don’t do that”. But if I was approached by a criminal who ask…

This is not a criminal hiring a contractor to work on Tornado Cash. It is an open source project on GitHub that many developers and researchers contributed to, in the interest of privacy. To use an analogy, see the open Matrix protocol, a tool for privacy that can facilitate encrypted communication between criminals.

Well, we're not seeing arrests of all the many developers and researchers who contributed to Tornado Cash simply in the interest of privacy as such (because that is not a crime), however, I presume that for this particular person there is some extra evidence establishing probable cause for the arrest.

For example, if it can be shown in court that he contributed to it with a knowing intent to facilitate privacy of illegal deals, that might be considered aiding and abetting "the concealment or disguise of the true nature, source, location, disposition, movement, rights with respect to, or ownership of, property, knowing that such property is derived from criminal activity", which is a crime under EU/Dutch AML law.

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