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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

#131

Post by ouid »

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.

it does doesnt it. Casinos certainly were money laundering establishments for the mob since their inception. The mobsters became politicians and stupid people argued that casinos provide public benefit on their behalf. The government decided that the only way to launder money through a casino was if the casino itself was in on it, and opted for heavy regulation on who can run casinos and how. People have still gotten away with money laundering through casinos but the regulations are onerous enough, and casinos profitable enough on their own, that the risk of getting completely shut down isnt worth it.

Furthermore, actions are not usually the things that are illegal. Usually the law prohibits actions which cause a specific effect. Like murder or pollution. You dont get one free murder every time you figure out a new way to kill people.

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

#132

Post by NelsonMinar »

Mixers never fail to astonish me. They are explicitly a product to facilitate money laundering. They are marketed as a way to wash illicit funds. And then the folks who run them get mad when law enforcement tries to shut them down?

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

#133

Post by Jasper_ »

dcolkitt wrote: post #117
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…

Here's a thing: when technology is designed in a way that makes it hard to work within the bounds of the legal system, it's usually the case that the legal system wins, not the technology. The view of the legal system is focused around people and their intentions, regardless of how much you try and confuse things with technology.

They will most likely view the smart contract and its wallet as one entity, despite that being technically not how it works technologically. Because as many people have tried and failed to figure out over the years, laws are interpreted by juries and judges, not computers. Technological roadblocks are things they don't have any problems jumping over, and deliberately trying to add roadblocks like that with the imagination they're untouchable also tends to piss them off even more.

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

#134

Post by woodruffw »

dannyw wrote: post #113
woodruffw wrote: post #90

Earlier quoted context omitted.

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.

Your association isn't what regulators are concerned with. They're concerned with the intent of the creator and operator of the service, which is why he's the one who's been arrested.

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

#135

Post by danaris »

capableweb wrote: post #124
woodruffw wrote: post #42

Earlier quoted context omitted.

None of these things has an efficient end in laundering money. That's in contrast to Tornado Cash, which was designed to launder money. In other words: you can use a hot dog stand to launder money. But if you were to intentionally establish a hot dog stand for the purpose of laundering money, the government would be absolutely correct in seizing your stand.

You're almost getting it. We still allow hot dog stands to exists, even though you could launder money via them. Instead, we let police investigate cases where money laundering is happening, and if it happens to be via one hot dog stand, take down that specific one. Rather than banning hot dog stands in general. Same goes for Tornado Cash. It was not designed for money laundering, although you could use it for that.…

...Because money laundering is illegal.

No one's going to advertise openly to the public "Assassination services here! Just call 1-800-KIL-THEM!"

And no one's going to put in public documents "we set up this company in order to facilitate money laundering."

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

#136

Post by thefreeman »

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.

Do you think you can just anonymously cash out a million dollars in casino chips with no identification or KYC happening?

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

#137

Post by smoovb »

jfim wrote: post #8
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…

How much of it is used for legitimate reasons versus illicit ones? If the overwhelming majority of the transactions are illicit, it makes sense to ban it.

How much of $100 bill use is for legitimate reasons versus illicit ones? If the overwhelming majority of the transactions are illicit, it makes sense to ban the $100 bill.

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

#138

Post by salawat »

realce wrote: post #35
JustLurking2022 wrote: post #24

Earlier quoted context omitted.

It's a service specifically designed to facilitate money laundering. It's a bit like running a business that produces paperwork to make stolen cars indistinguishable from legal ones - there's no reason such a service should be allowed to exist.

Then produce distinct legislation that bans the specific practices used, otherwise it's just giving preference to currently entrenched forms of money laundering. It's not illegal whatsoever to mix up my dollar bills with a group of other people and get the same amount out that I put in. Such a statement is ridiculous.

Correct assuming you maintain documentation that keeps the evidence chain intact and produceable on request.

If you don't, you're laundering. It's like a bunch of tech people waltzed into finance, ignored the entire history of the institution, and lessons paid for in blood, and expect everyone else to bend over backwards for them.

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

#139

Post by x86x87 »

polygamous_bat wrote: post #75
x86x87 wrote: post #33

Earlier quoted context omitted.

What a world we are living in. Mostly illegal. Huh. Do you have any data to back this claim? Also, should banks be banned if their customers are doind shady things outside of using their services?

If it's a mafioso bank used mostly by the mafia, then yes, absolutely, they should be investigated and shut down. As for data, just as a first-order estimate, check out the rekt leaderboard [1] and see how many of the stories end with "and the stolen funds were routed through tornado, fin." If all crypto-adjacent crimes are reported to FBI at some point I am sure they have a much clearer statistics, but even as a civ…

Yes. Anecdotal evidence. The best kind!

Who decides who the mafia is?

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

#140

Post by sam0x17 »

woodruffw wrote: post #59
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?

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…

Money crimes should be prosecuted and solved at their start points and endpoints, not within the financial system. Failure to adhere to this standard is why we no longer really control the money in our bank accounts anymore. Want to send a wire to your friend living in the middle east with a sketchy name? Might get flagged. Want to purchase something out of the ordinary for you online? Your debit card will probably block it at least at first. Law enforcement has become lazy and we have as well. Instead of solving actual crimes, we just use ML algorithms to find sketchy-looking transactions and then block them and investigate later maybe. This has significantly reduced our privacy and freedom at a much higher cost than the purported gains. This is the whole motivation behind the original push into crypto in the early 00s. We need something not beholding to any government that is as good as cash but digital, and the US gov sanctioning a mixer is just proof of this dire need.
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