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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

#151

Post by jmyeet »

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…

You have to remember that access to the US financial system is a privilege not a right. To be granted that privilege, a financial institution has a number of obligations. Thesee include various KYC/AML obligations.

So this isn't Tornado Cash "might be used for illegal purposes" so much as it's clear evidence they're failing to meet their legal obligations.

There's a larger point here too: as much as proponents tour crypto's extragovernmental status, it would take very little effort by governments to completely cripple any crypto assset in practical terms.

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

#152

Post by jfim »

toolz wrote: post #92
jfim wrote: post #43

Earlier quoted context omitted.

That may be true if law enforcement authorities have unlimited resources, but in practice they don't. Imagine that a hypothetical service is used at 99% for illicit transactions and 1% for legitimate ones. Is the best outcome for society to spend say 5 million dollars to shut down that service, or 500 million to figure out who is using that service maliciously and sue only the people who are using it maliciously?

impossible to answer that question - what if the 1% of activity continues to grow and encourages billions more dollars of pro-social economic activity in the future? All we can know for sure is that shutting down a white-market financial service or worse, blacklisting its users, has the guarantee that innocent people will be harmed. Further: disrupting a single avenue of finances for the funding of illicit activity a…

What's the legitimate use case for using cryptocurrency mixers? What would be this kind of activity that would grow and encourage "pro-social economic activity?" What harm is encountered by these innocent people?

From my perspective, an economically rational actor would want to minimize overall money transmission costs, so they'd avoid cryptocurrency mixers unless they had a particular reason to.

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

#153

Post by capableweb »

danaris wrote: post #135
capableweb wrote: post #124

Earlier quoted context omitted.

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."

Alright, so there is no proof that Tornado Cash was setup to facilitate money laundering, yet so many here on HN keeps saying "was designed to launder money". What does "designed to X" mean if not that the tool itself was intentionally, purposefully and explicitly made to do X? And if that's true, why isn't there any public evidence of that being true?

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

#154

Post by polygamous_bat »

x86x87 wrote: post #139
polygamous_bat wrote: post #75

Earlier quoted context omitted.

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?

As I said, this is only a first order estimate, but even that is over hundreds of millions. I am sure the FBI has a much more detailed forensic account of tornado that they will bring up in the courts, which will then rule according to the law based on the evidence.

On the other hand, if you don't trust FBI, the law, or the courts to do the right thing, you have a different problem entirely, at which point none of what I say should matter to you.

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

#155

Post by SkipperCat »

woodruffw wrote: post #87
redox99 wrote: post #52

Earlier quoted context omitted.

That's like saying knives are designed to facilitate murder. TC is made for privacy, which either is or should be a basic right. Without tools such as TC if I send you money, show you some POAPs[1] I own, or otherwise interact in any way with my crypto, it is fairly simple to deduce or make educated guesses of how much crypto I own, who I send it to or from, and more. This has serious implications not only for privac…

> That's like saying knives are designed to facilitate murder. There are plenty of knives that are designed to facilitate murder, and they are correspondingly regulated. We don't regulate kitchen knives in that way, because they don't represent the same intent. If your financial instrument leaks all of your transactions and makes you a target of criminal scrutiny, you should consider using a different instrument. Soc…

Case in point. Ginsu knife - not regulated. Switchblade - regulated. One is intended to slice a tomato, the other is intended for concealed carry and stabbing people (who are not a tomato).

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

#156

Post by 0x_rs »

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…

Criminals are most certainly going to get away with it regardless of how many restrictions and surveillance you apply to the little people, as they have the means (capital) to do so. I don't want to stretch it too far, but the current rules seem nearly purposefully pointed towards the least effort category. There's quite a lot of coverage on this matter, some (and a lot in the cryptocurrency scene) like to cite works from Ronald F Pol who has done a lot of heavy handed criticism on AML et cetera (as far as claiming less than one percent of real-world regulations effectiveness), these claims can be disputed, but it's apparent even to mainstream publications most unlawful flows are uninhibited and the approach is ineffective, expensive and dangerous.

https://www.economist.com/finance-and-economics/2021/04/12/t...

https://en.wikipedia.org/wiki/Danske_Bank_money_laundering_s...

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

#157

Post by JustLurking2022 »

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.…

You're almost clever... Tornado is accused of being designed to facilitate money laundering and, realistically, has very little other purpose.

By contrast, a hotdog stand is typically designed to cook and sell hotdogs and, in the rare instances where money laundering occurs, it's not a primary service the hotdog stand offers to clients, and will still get the owner arrested.

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

#158

Post by JumpCrisscross »

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…

> chief selling point of Tornado Cash is money laundering, which is in and of itself a crime in both the US and Netherland

Also, law enforcement publicly announced Tornado was used to launder billions by North Korea [1]. Months ago [2]. Everyone continued as if nothing happened. This wasn’t based on hypotheticals.

[1] https://hub.elliptic.co/analysis/the-100-million-horizon-hac...

[2] https://www.cnbc.com/2022/06/30/north-korea-likely-behind-10....

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

#159

Post by polygamous_bat »

sam0x17 wrote: post #16
wil421 wrote: post #11

Earlier quoted context omitted.

Why should North Korea be allowed to steal and hack from other country’s people and organizations? It should be shut down immediately. I feel like your trying to say NK and Tornado should be able to do illegal activities that harm people. Just because you don’t like the police or something.

Your argument is akin to saying people shouldn't be allowed to drive cars because a car was used one time in a heist.

Driving a car requires a license and registration of the vehicle. You can go to jail for driving a car without a registration or license.

In very much the same way, if you are running a money transmitting business, you need to register with the government and follow the government laws. Otherwise, you risk going to jail. It's not rocket science. Just because it is on the internet doesn't make it a whole new thing.

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

#160

Post by capableweb »

JustLurking2022 wrote: post #157
capableweb wrote: post #124

Earlier quoted context omitted.

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.…

You're almost clever... Tornado is accused of being designed to facilitate money laundering and, realistically, has very little other purpose. By contrast, a hotdog stand is typically designed to cook and sell hotdogs and, in the rare instances where money laundering occurs, it's not a primary service the hotdog stand offers to clients, and will still get the owner arrested.

> You're almost clever... Tornado is accused of being designed to facilitate money laundering and, realistically, has very little other purpose.

It does have other purposes, hiding transactions from the public, which I have used Tornado Cash for many times in the past.

> I used Tornado Cash (non-US citizen here) for hiding transactions from the public (not hiding from the government), and when I filed my taxes, I still accounted for everything that is stored there + transacted via Tornado Cash, just like I do for my bank account. Appendix contained instructions for how they could access the proof of my transactions and accounts to verify themselves.

Not sure why people think what I did should be illegal, I'm paying my taxes and declare everything just like everyone else, but somehow I shouldn't be allowed to hide my transactions from randoms on the internet?

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