Investors sue Treasury Department for blacklisting crypto platform Tornado Cash • Hacker News Board

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

#231

Post by dcolkitt » Mon, Sep 12, 2022, 4:23 PM UTC

vorpalhex wrote: post #187

dcolkitt wrote: post #117

Earlier quoted context omitted.

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…

> 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. If I rig up my car to explode when someone walks by whistling the right tune, am I without responsibility? I didn't blow up the car.. the car blew itself up. Obviously I'm at fault. There is no debate here. Any automation you create…

> If I rig up my car to explode

Mechanical devices are not protected as speech.

> If I hire a hitman.. I am guilty of murder.

SCOTUS has already carefully defined this in the Brandenburg test. Speech is only not protected when it results in direct, imminent lawless action. And SCOTUS has consistently ruled that the boundary for the test is extremely concrete. (Contrary to popular opinion yelling fire in a crowded theatre is actually protected by Brandenburg under the First Amendment.)

Sending a text message to a hitman telling him to "wack Tony at midnight" fails the Brandenburg test because it leads to imminent lawless action. But you can literally publicly advocate for an ideology to overthrow the United States government and murder millions of people, and that's Constitutionally protected because there's no imminent lawless action.

Writing and publishing open source software is Constitutionally protected, because the simple act of publishing software does not lead to imminent lawless action. Even if it's reasonable to assume that the software will likely be adopted for illegal purposes. Again this isn't hypothetical, SCOTUS has consistently ruled that the government cannot restrict the ability to publish instructions on how to make pipe bombs or 3D printed guns.

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

#232

Post by A4ET8a8uTh0 » Mon, Sep 12, 2022, 4:23 PM UTC

sofixa wrote: post #182

sam0x17 wrote: post #140

Earlier quoted context omitted.

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 b…

> 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 That's easier said than done. It's drastically easier to catch crime by it's results (money) than in the act. Famously that's how Capone was caught. And what would be the advantage of that, to a…

And this is where it gets fun. Banks will absolutely not tell the customer that their transaction is flagged for one reason or another partly so that they do not lose their 'safe harbor' status under BSA. Any numbers you will see might be from the government, but FinCEN is relatively tight lipped about those for a variety of reasons. The discussion is taking place now, because it has become fairly onerous on an average person, who sends anything to MOHAMMED HASSAN. Instead of data, I can only offer anecdata. Long long time ( or not long ago depending on your perception of time ), we had a person, whose transaction matched some OFAC info, which resulted in bank holding the transaction. I cannot go into details beyond saying that eventually even OFAC representative seemed to admit to that it does not seem to apply to him. To the best of my knowledge, a year after that person still did not get his funds.

It may have not happened to you, but I do not think it is as uncommon as you think. Parent is right. We are doing this backwards.

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

#233

Post by joyfylbanana » Mon, Sep 12, 2022, 4:24 PM UTC

josh2600 wrote: post #186

JumpCrisscross wrote: post #158

Earlier quoted context omitted.

> 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/…

Just going to point out that Tornado cash did invoke chainalysis oracles for all of their interface tools. The problem is that on ethereum it's not possible to censor a deployed contract. There is a possibility that miners could collude not to authenticate blocks with tornado cash transactions in them, but that gets into some interesting game theory in a globally distributed system. Not every miner is subject to US l…

> The problem is that on ethereum it's not possible to censor a deployed contract.

It is possible, via a hard work. Similarly as it was possible to transition from PoW to PoS. The question is, if there is political will for that. Clearly changing the protocol rules is possible has it has been done with ethereum in the past, including for censorship reasons (in the earlier hard fork the reason was to cancel a hack).

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

#234

Post by welshwelsh » Mon, Sep 12, 2022, 4:24 PM UTC

sofixa wrote: post #170

logicalmonster wrote: post #103

Earlier quoted context omitted.

> Normally, there'd be an aspect of plausible deniability If it was publicly known that you had exactly 1 ton of legally acquired gold in your house, would you feel perfectly safe sleeping at night? Is there not 1 sicko out there that would be willing to torture your family to find the combination to your vault? Plausible deniability exists here. It's called wanting privacy, and there's perfectly valid and non-crimin…

Why don't you use the traditional banking system, which doesn't result in publicly listed transactions? I struggle to find a legitimate use case for hiding transactions from your bank and thus tax authority (assuming a developed country).

>assuming a developed country

Bad assumption

Anonymous fundraising for political dissidents is the biggest use case I can think of.

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

#235

Post by A4ET8a8uTh0 » Mon, Sep 12, 2022, 4:25 PM UTC

npc54321 wrote: post #171

woodruffw wrote: post #98

Earlier quoted context omitted.

The features don't matter. What matters is intent and demonstrating that intent. Both the Treasury and Dutch authorities have reason to believe that Tornado Cash was operated with the intent of facilitating money laundering. It's up to a court to determine the veracity of that accusation.

Guilty until proven innocent (they are blacklisted/sanctioned) I see.

FWIW, the money sanctioned under OFAC is still that of the owner so there is a process in place that has a semblance of the rules of law. However, getting that money released by the bank is nothing short of a herculean effort based on cases I have seen over the years.

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

#236

Post by rglullis » Mon, Sep 12, 2022, 4:26 PM UTC

hef19898 wrote: post #206

adastra22 wrote: post #200

Earlier quoted context omitted.

You can’t just say “they had months to react but didn’t” if you don’t have any idea of what they could have done differently. React how?

Close down until you figured out a way to react. Money laundering is serious crime, helping North Korea is as well. Tornado cash did apparently both, and authorities gave them a heads up. If it was me, I would close my shop down.

No post body was provided.

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

#237

Post by cdiddy2 » Mon, Sep 12, 2022, 4:26 PM UTC

ASalazarMX wrote: post #210

cdiddy2 wrote: post #177

Earlier quoted context omitted.

They are explicitly a product for user privacy. Given that the depositor can prove the source of funds put into tornado cash via a zk-proof there is no reason that this should be shut down.

> They are explicitly a product for user privacy That's the facade. In my experience, Bitcoin is still the main ecoin demanded in phishing/ransomware incidents, even when more privacy-friendly ecoins exist. A tumbler's purpose is distorting Bitcoin's public blockchain (one of its core tenets), and that's very attractive to criminals.

Of course its attractive to criminals. Same reason they love cash. Doesn't mean that we should ban cash

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

#238

Post by Jasper_ » Mon, Sep 12, 2022, 4:27 PM UTC

dcolkitt wrote: post #218

Jasper_ wrote: post #133

Earlier quoted context omitted.

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…

> 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. If this was true, Internet pornography would have been successfully squashed by the existing obscenity laws that heavily regulated pornographic material.

It was, though? And continues to be. In the mid-90s, you could pretty easily find illegal material without looking too hard. It was already illegal by the Child Protection and Obscenity Enforcement Act, an early Internet bill which mostly said "illegal porn is still illegal, even if it's on a computer", and it also required producers of pornography to keep detailed records on talent & crew in the production. By the mid 2000s, large sweeps of enforcement happened, and thousands of studios without proper documentation and recordskeeping shutting down. The CIPA act required schools, libraries and public places where children could be to install internet filters, and make policies preventing children from viewing such material.

Pornography isn't illegal in the US, it's pretty well-regulated, and once the Internet started entering mainstream culture, it quickly adapted to the existing legal framework and culture that was already there.

This is, of course, a very US-centric view, but so is a lot of early Internet history, along with its culture.

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

#239

Post by yieldcrv » Mon, Sep 12, 2022, 4:27 PM UTC

tmpz22 wrote: post #224

bornfreddy wrote: post #220

Earlier quoted context omitted.

From the article: > One plaintiff in the lawsuit is a crypto investor who used Tornado Cash to send funds to support the Ukrainian war effort, hoping to preserve his anonymity and avoid retaliation from the Russian government.

Ok so a user who already has crypto and doesn't want to convert it first (fees) may be encouraged to mix it (privacy) and that is a legitimate usecase. That makes sense to me, though it seems like a very rare event that should not be the sole basis for the underlying platform. Also I should've read the full article first.

> though it seems like a very rare event that should not be the sole basis for the underlying platform.

not rare, 12,000+ unique users on just the ethereum network alone

only a handful would be from large scale hacks, a bigger handful from phishing

even the treasury's estimates were that less than 20% of use was illicit, it is a totally new standard to vilify it based on whatever it is vilified for

https://dune.com/poma/tornado-cash_1

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

#240

Post by A4ET8a8uTh0 » Mon, Sep 12, 2022, 4:28 PM UTC

TEP_Kim_Il_Sung wrote: post #111

mattficke wrote: post #100

Earlier quoted context omitted.

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.

No. Also, there were several recent articles/speeches from various AML/BSA/Fraud folks to lower that amount even further for several purposes including CTR. For better or worse, BSA has become its own industry with a lot of money riding on keeping things annoying to regular people ( and barely doing anything to stop actual criminals, who have skills, patience and resources to bypass all the safeguards ).