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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

#241

Post by bornfreddy »

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.

Not sure how rare it is. There is lots of people who got crypto-rich. It is easier to donate money that came easily...

I would assume making a nontrivial donation in fiat privately is also very difficult.

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

#242

Post by JumpCrisscross »

dannyw wrote: post #230
JumpCrisscross wrote: post #221

Earlier quoted context omitted.

> Tornado devs blocked all OFAC addresses from accessing the frontend, which is the only power they had, since the contracts themselves are immutable Which does nothing in practice. Any AML lawyer would have advised them so. The fact that the service was designed to be incompatible with the law isn’t a get-out-of-jail card.

What would you say about Signal, designed to be incompatible with the law around lawful subpoenas?

> What would you say about Signal, designed to be incompatible with the law around lawful subpoenas?

It’s not. Subpoenas require handing over what you have. If you don’t have it there is no obligation to disclose. Signal may run afoul of data-retention laws. But there are no such requirements in America.

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

#243

Post by ikeboy »

JumpCrisscross wrote: post #221
ikeboy wrote: post #202

Earlier quoted context omitted.

This is incorrect. Tornado devs blocked all OFAC addresses from accessing the frontend, which is the only power they had, since the contracts themselves are immutable. See https://www.coindesk.com/tech/2022/04/15/tornado-cash-adds-c...

> Tornado devs blocked all OFAC addresses from accessing the frontend, which is the only power they had, since the contracts themselves are immutable Which does nothing in practice. Any AML lawyer would have advised them so. The fact that the service was designed to be incompatible with the law isn’t a get-out-of-jail card.

I read the lawsuit in question. None of the plaintiffs were arrested. Their issue is that OFAC overstepped the bounds of their statutory authority, which none of your arguments address.

I'm also not aware of what US law would have been violated by either

1. Coding and publishing the tornado source code

2. Deploying several instances to the blockchain in 2019.

There's no US prosecutions based on creating or operating tornado. The Dutch one has not charged the person they arrested yet, according to https://www.coindesk.com/policy/2022/08/24/alleged-tornado-d..., so I don't know what unlawful actions they think he's responsible for.

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

#244

Post by JumpCrisscross »

douglaswlance wrote: post #227
hef19898 wrote: post #206

Earlier quoted context omitted.

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.

It cannot be shut down. The contract is immutable. It's still live, and it will still be live for decades to come, with new duplicates of the contract being published every day.

> It cannot be shut down. The contract is immutable.

If that’s truly the case, shut down as in stop developing it and advise users to stop using it. Then the addresses get sanctioned and nobody is surprised.

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

#245

Post by bruiseralmighty »

eropple wrote: post #168
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…

> In an of itself, mixing or trading to obfuscate your identity shouldn't be considered a crime or unreasonable in the slightest. "Financial privacy" isn't a real thing, because you owe taxes on income and investments. Can you explain to me how your tax assessor is able, then, to properly identify your income and tax you on it as appropriate? (Money laundering and tax evasion do not always go hand-in-hand. Many laund…

Privacy exists even if the government violates it due to their tax schemes. A _right_ to privacy may even exist as a natural human right. If a country decides collectively that this is the case, then what ought to change is the tax policy, not every user service.

We can argue over how easy it would be, but I would presume its possible for a government to switch over to taxing hard assets like land, machines, and shipments at ports rather than income and investment products if we decide those should be shielded by a right to privacy. Most of human history existed without a tax on income or loans (investments), an argument that a right cannot exists because of the present tax structure is like the ultimate status quo warrior-ing.

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

#246

Post by logicalmonster »

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).

> Why don't you use the traditional banking system, which doesn't result in publicly listed transactions?

You mean the banking system that freezes protesters' accounts when they do something doubleplusungood?

Personal choices that don't violate the rights of others shouldn't require any explanation to retain your rights. But it's not hard to think of a lot of reasons for somebody to use crypto over banks besides the state not being able to trivially shut you out of your life. There's other good reasons to choose crypto over banks, but that's a good one in my book.

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

#247

Post by woodruffw »

pcthrowaway wrote: post #174
woodruffw wrote: post #134

Earlier quoted context omitted.

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.

And you're buying into propaganda suggesting someone pushing the envelope in cryptography is creating tooling specifically for money laundering. 30 years ago, the NSA toed a similar line in their war on PGP, saying it was used in practice for "money laundering, child pornography, and terrorism" - https://reason.com/video/2020/10/21/cryptowars-gilmore-zimme...

For the umpteenth time in this thread: intent matters. Regardless of what the NSA said 30 years ago, it is manifestly apparent to every single person in this conversation that neither HTTPS nor PGP nor any other cryptographic scheme designed for individual privacy was designed with money laundering in mind.

At the absolute worst, they were agnostic to the presence of criminal activity. This is in contrast to Tornado Cash, which was repeatedly told that their service was being used to launder money.

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

#248

Post by A4ET8a8uTh0 »

croes wrote: post #225
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…

Are you sure they are lazy or are they just underfunded and with to few personnel?

It probably depends. I live in Chicagoland. Cops here are a lot of things, but I can't honestly say they are underfunded. The pension alone is likely worth the risk ( source: couple cops in my extended family ) even if money is not staggering ( and it still not on the low end by any means ).

But to go back to the original query. It is just so much more easier to click couple of buttons than go somewhere and ask questions. It is cheaper too. The convenience trumps most of the other reasons. The same goes for privacy. The convenience killed it.

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

#249

Post by hef19898 »

rglullis wrote: post #236
hef19898 wrote: post #206

Earlier quoted context omitted.

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.

Quoted post unavailable.

The part where Tornado Cash as an exchange couldn't shut down for a while. And the fact that those, well, "contracts" cannot be nullified like literally any other contract signed in any jurisdiction is troublesome in itself.

Lucky for Elon that he didn't use one of those contracts to buy Twitter.

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

#250

Post by mr_spothawk »

mattficke wrote: post #91
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…

Financial privacy is a limited right in the US (and in most other countries), you’re not allowed to hide financial assets or transactions from the government. You can think that’s bad, but it’s unambiguously the law (the Supreme Court ruled on the constitutionality of the Bank Secrecy Act back in the 70’s.) The sanctions were entirely predictable, no one should be surprised.

https://www.investopedia.com/terms/b/bank_secrecy_act.asp

> KEY TAKEAWAYS

> The Bank Secrecy Act (BSA) is U.S. legislation aimed at preventing criminals from using financial institutions to hide or launder money.

> The law requires financial institutions to provide documentation to regulators whenever their clients deal with suspicious cash transactions involving sums over $10,000.

> The law does not require documentation for every transaction over $10,000, but businesses must file Internal Revenue Service (IRS) Form 8300 if they receive more than $10,000 in cash from one buyer.

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