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Investors sue Treasury Department for blacklisting crypto platform Tornado Cash

nytimes.com

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Re: Investors sue Treasury Department for blacklisting crypto platform Tornado Cash

#111

Post by TEP_Kim_Il_Sung »

mattficke wrote: post #100
theplumber wrote: post #85

Earlier quoted context omitted.

What's the difference between money launderying features and privacy features? Tornado Cash in itself does is not launderying money because you still have to prove to the IRS how you got the money or the asset(i.e bills, invoice etc) and you still have to obey KYC rules. You can't just say the money is from Tornado Cash and be done with it. Is the U.S Mint a money launderying service because it provides an untraceabl…

To your last question, this is why financial institutions are required to report cash transactions over $10,000. There are a number of constraints on how untraceable cash is.

Has this amount ever been adjusted for inflation?

It is my understanding, that $10,000 at the time this law was set, was about ¼ the price of a small home.

Re: Investors sue Treasury Department for blacklisting crypto platform Tornado Cash

#112

Post by salawat »

theplumber wrote: post #85
woodruffw wrote: post #59

Earlier quoted context omitted.

I have no problem with Tornado Cash being openly available software under a permissive license. I have a problem with people running a Tornado Cash-based service that is really just a money laundering service. You should take a step back: "open source" does not rinse away the underlying properties of a service. I can't write and deploy a web application that contracts hitmen and use the MIT license as a defense; the…

What's the difference between money launderying features and privacy features? Tornado Cash in itself does is not launderying money because you still have to prove to the IRS how you got the money or the asset(i.e bills, invoice etc) and you still have to obey KYC rules. You can't just say the money is from Tornado Cash and be done with it. Is the U.S Mint a money launderying service because it provides an untraceabl…

KYC applies to money transmitters directly. End consumers only indirectly by virtue of any financial institution ending up in hot water for non-compliance.

You don't get to shift regulatory burden to the consumer.

Re: Investors sue Treasury Department for blacklisting crypto platform Tornado Cash

#113

Post by dannyw »

woodruffw wrote: post #90
adastra22 wrote: post #62

Earlier quoted context omitted.

The chief purpose of a mixer is financial privacy. It’s just that on a public blockchain privacy from snoops and privacy from law enforcement can’t be differentiated.

If the Treasury or Dutch authorities are to be believed, the chief purpose of this mixer was to facilitate money laundering. That is key to this entire discussion: they have reason to believe that Pertsev knowingly ran a money laundering service, rather than running a service that criminals can abuse to launder money.

That's interesting. As a Tornado Cash user, I have never associated this with an intentional money laundering service, but rather a bunch of developers advancing zk-SNARKs and other cryptographic primitives.

As someone who was excited by the original Bitcoin whitepaper back in 2011, zk-SNARKS was what excited me about cryptocurrency again in 2021.

Re: Investors sue Treasury Department for blacklisting crypto platform Tornado Cash

#114

Post by pigtailgirl »

zeusk wrote: post #80
bitxbitxbitcoin wrote: post #69

Earlier quoted context omitted.

The difference between laundering and washing doesn’t exist in current financial regulation. It does to those who believe in financial privacy.

Enlighten us with how washing differs from laundering then; because I haven't had the crypto koolaid yet.

-- as it was explained to me (I don't crypto) - because everything is public - you might want to disassociate (wash) transactions from yourself for perfectly legitimate reasons - not really needed in traditional finance as people typically don't have access to your bank account - however - this is not necessarily the same as wanting to take money you gained illegitimately and make it legitimate (launder) --

Re: Investors sue Treasury Department for blacklisting crypto platform Tornado Cash

#115

Post by polygamous_bat »

realce wrote: post #63
polygamous_bat wrote: post #51

Earlier quoted context omitted.

If you ran an establishment where people would come in with big bags of cash with dubious source, swirl them around in a big vat, and someone else would come in with a chit to take out some cash from your vat, I am sure your establishment will get investigated and shut down. In this way it's no different from the real world. Just because it's online doesn't make it ok.

Can you show me any statement in US law where such a practice is illegal? What you're describing sounds exactly like a casino.

U.S. Code § 1955 - Prohibition of illegal gambling businesses [1] stops you from starting a gambling parlor or casino on your basement without a government license.

[1] https://www.law.cornell.edu/uscode/text/18/1955

Re: Investors sue Treasury Department for blacklisting crypto platform Tornado Cash

#116

Post by Karunamon »

woodruffw wrote: post #38
mikece wrote: post #3

Banning a service because it "might be used for illegal purposes" is insufficient. This is a problem with law enforcement in general: they are lazy and seek to have automated solutions to so much of what used to be called police work. This applies to warrant-less wiretaps, pulling information on people from 3rd party data brokers to side-step warrant and FOIA requirements, and more. I would rather money-launderers ge…

"Might be used for illegal purposes" is a significant understatement. The chief selling point of Tornado Cash is money laundering, which is in and of itself a crime in both the US and Netherlands. Normally, there'd be an aspect of plausible deniability: torrent index operators can, for example, rightfully claim that they're facilitating legal filesharing, or that they're entirely agnostic to the content being shared…

Note that "money-laundering" is only a thing you have committed if you are dealing in funds that are the proceeds of another crime. If you are not committing another crime, you are more than welcome to conceal the source and destination of your financial transactions.

The chief selling point of Tornado Cash was addressing the significant privacy problems inherent in a currency based on a public ledger. The idea that we should destroy privacy tools because criminals use them is ridiculous.

Re: Investors sue Treasury Department for blacklisting crypto platform Tornado Cash

#117

Post by dcolkitt »

turdnagel wrote: post #17

This is definitely a pandora's box type issue. I believe it is different from the "code is speech" series of arguments around PGP because a deployed smart contract is not merely source code / compiled bytecode, but also a wallet containing funds. Of course, you still need the Ethereum "world computer" to make it run, and Tornado Cash is not very helpful without a significant amount of liquidity to sufficiently provid…

When a smart contract is deployed, literally all that happens is that the code is broadcast to the network. It is true that the contract itself has a wallet and runs operations, but it operates autonomously outside the control of the person who deployed the contract.

If a smart contract does something illegal, the person who deployed it has no more responsibility than if someone does something illegal with encryption software downloaded from Github. The only responsible part you could really argue for is the Ethereum node operators, since they're the ones actually carrying out the illegal computation. But is the government really going to outlaw the Ethereum network?

Re: Investors sue Treasury Department for blacklisting crypto platform Tornado Cash

#118

Post by mikece »

adastra22 wrote: post #62
woodruffw wrote: post #38

Earlier quoted context omitted.

"Might be used for illegal purposes" is a significant understatement. The chief selling point of Tornado Cash is money laundering, which is in and of itself a crime in both the US and Netherlands. Normally, there'd be an aspect of plausible deniability: torrent index operators can, for example, rightfully claim that they're facilitating legal filesharing, or that they're entirely agnostic to the content being shared…

The chief purpose of a mixer is financial privacy. It’s just that on a public blockchain privacy from snoops and privacy from law enforcement can’t be differentiated.

You hit it on the head: this is a War on Privacy being presented as a war on money-laundering. The biggest money laundering schemes involve commercial banks and real estate (*ahem* TRUMP! *ahem*....) and not online cryptocurrency schemes. It's not like the North Koreans have no other way to mask the trail on what they steal, and I suspect those saying they are certain the North Koreans are bad guys here will insist they cannot divulge how they know this (under the aegis of National Security or some other excuse).

Re: Investors sue Treasury Department for blacklisting crypto platform Tornado Cash

#119

Post by TEP_Kim_Il_Sung »

duped wrote: post #60
TEP_Kim_Il_Sung wrote: post #50

Earlier quoted context omitted.

The chief selling point of Tornado Cash is that it's distributed open-source software, with no man in the middle, no single point of failure. That's right: Government sanctioned open-source SOFTWARE. Are you sure you want this precedent set?

> The chief selling point of Tornado Cash is that it's distributed open-source software, with no man in the middle, no single point of failure for laundering money. You can't remove the key feature from metaproperties of the software and call the latter the "chief selling point."

So say you, and yet my claim is self-evident, while yours needs hordes of robe&badge clad bureaucrats, and the promise of violence, to enforce.

Re: Investors sue Treasury Department for blacklisting crypto platform Tornado Cash

#120

Post by dannyw »

helen___keller wrote: post #102

I kind of agree that Treasury should not have exactly this power to ban Tornado protocol. However, I believe Treasury certainly has the power to ban all transactions with networks hosting money laundering protocols. It would certainly be worse for crypto if it were illegal to buy sell ETH and friends because their networks host Tornado protocol. I see this attempt to moderate the network itself as “going easy” on cry…

Moderation is generally not required under US law.

For example, Section 230 of the Communications Decency Act provide safe harbor provisions: 'No provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider'.

It doesn't matter if I run a site with 10 users or 100 million users: the law's provisions and protections are the same.

You are right that regulators generally strike when there is a critical mass. However, my 2c is that this is not backed by statue, and US Treasury does not have the right to sanction software code. They can certainly sanction users who use TC for money laundering, but code itself?

That's like sanctioning PGP or end-to-end encryption...

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