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

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

#341

Post by andrewaylett » Mon, Sep 12, 2022, 5:57 PM UTC

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…

Come to Scotland, we do regulate kitchen knives in the same way as we regulate knives designed as weapons.

It's actually quite challenging to find a decent pocket knife that's legal to carry here: if the blade locks in place, it's not legal. So pretty much any Leatherman or Gerber that's not one of the mini ones is out, and all the cheaper brands are the same. I've taken to carrying a Geekey[1] and a knock-off Raptor[2].

[1]: https://geekey.com/ -- although the feature being headlined is the one I'm least likely to use.

[2]: https://www.leatherman.co.uk/collections/raptor-rescue/produ..., literally a quarter of the price without the branding: https://smile.amazon.co.uk/gp/product/B08ZSV5644

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

#342

Post by everfree » Mon, Sep 12, 2022, 5:57 PM UTC

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.

There's nothing inherent to Tornado Cash that makes it better for money laundering than for privacy.

It's very basic software from a functionality perspective. You put coins into a pool, then at a later date, you take coins back out of the pool. That's all.

It's hard to ascribe specific intent to a system like that, beyond the intent to give people a tool to transact without the entire history of their account being broadcast publicly and permanently on the blockchain.

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

#343

Post by whatisweb3 » Mon, Sep 12, 2022, 5:59 PM UTC

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…

You actually could publish “illegal code” because code is protected under 1st amendment, as free speech. Legal precedent has been set by Bernstein v US DoJ.

There is an open question about whether publishing non custodial contract code on Ethereum counts as providing a service. If you post 10 lines of immutable code onto Ethereum, and some years later a user chooses to run this code on their machines for criminal behavior, should you be prosecuted?

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

#344

Post by 300bps » Mon, Sep 12, 2022, 6:00 PM UTC

downandout wrote: post #321

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 selling point of Tornado Cash is money laundering, which is in and of itself a crime in both the US and Netherlands." You have a fundamental misunderstanding of US law with regard to money laundering. Obfuscating the source of funds, by itself, is not money laundering. Money laundering requires a "predicate offense" - the money that is being laundered must be proven to have had an illicit source. Further,…

Money laundering requires a "predicate offense"

Structuring is one of the most common methods of facilitating money laundering.

No predicate offense required. It’s illegal all on its own.

https://bsaaml.ffiec.gov/manual/Appendices/08

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

#345

Post by josh2600 » Mon, Sep 12, 2022, 6:01 PM UTC

everfree wrote: post #313

toomuchtodo wrote: post #305

Earlier quoted context omitted.

It is delightfully ironic to see code as law slowly chipped away by Law until law is code and you’re back to finance business logic on a slow distributed computer fabric.

It's too early to say that definitively, imo. As a counterexample to the DAO hack, the parity multi-sig hack of 2017 resulted in over $160M worth of ether being frozen on-chain. There were calls to hard fork Ethereum to return it, but the hard fork was never tenable. That was barely a year after the DAO hack and fork. Personally, I believe there is a zero chance that a hard fork based on Tornado Cash becomes viable.…

A hard fork based on tornado cash isn't likely, but what if miners refuse to process blocks that have tornado transactions in them? What happens then?

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

#346

Post by ashwagary » Mon, Sep 12, 2022, 6:02 PM UTC

PuppyTailWags wrote: post #273

mikece wrote: post #118

Earlier quoted context omitted.

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 t…

> 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). My understanding is that the aegis of National Security isn't unwarranted sometimes. For example, if they know NK are bad guys here because one of their spies literally witnessed the laundering (as a secretary, paper-pusher, progr…

Too bad for national security that people have rights.

I saw a post recently about the fact that nobody could easily identify the users of pay phones in the past and how modern day lawmakers would probably ban them out of fear of anonimity. It showed just how much privacy the average person has lost over the years...there has to be pushback.

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

#347

Post by everfree » Mon, Sep 12, 2022, 6:02 PM UTC

phatfish wrote: post #304

hef19898 wrote: post #198

Earlier quoted context omitted.

Everytime a major bank is caught doing something like that, UBS and Deutsche Bank come to mind, there is huge outcry about the lack of consequences. If a crypto exchange get's caught doing it, and there are consequences, there is huge outcry (among certain people) because there are consequences. Added severity, in the case of tornado cash, was helping North Korea. So not just money laundering but also circumventing s…

It's plain old double standards, Tornado Cash is the "peoples" money laundering service, anyone can use it, so it could be of benefit to them at some point. Global banks that could facilitate the same thing would only consider doing it for the super-rich to hedge against the possibility of getting caught and fined. So are not open to the average person, hence people have no problem calling for them to be held to acco…

Banks are organizations made out of people who can be held responsible. Tornado Cash is a piece of software that is not run by any person.

Banks can be fined and people can be imprisoned, but you can't fine or imprison software. The Treasury ban is a direct ban on software, which is a departure from precedent.

That's what makes this legal case unique, and why it's not simply a double standard.

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

#348

Post by polygamous_bat » Mon, Sep 12, 2022, 6:03 PM UTC

notch656a wrote: post #324

polygamous_bat wrote: post #299

Earlier quoted context omitted.

Here is an example: in Texas, unauthorized use of a vehicle, which would include driving a car that you can't prove is yours, can be punishable by two years in jail. [1] From what I understand getting caught driving without a license the first time is generally a misdemeanor, but for repeated offence in for example CA can land you in jail. Running a whole operation around driving without a license is what tornado cas…

You can actually operate and drive a car on private property without a license in Texas. In fact in Texas you can even drive a car drunk if it's on private property not open to the public, like a fenced off private parking lot. Using your analogy, an instance of TC on private property would not be licensed.

Tornado cash would not be sanctioned if it were not public and therefore not used by North Korea, yes. What is your point here?

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

#349

Post by everfree » Mon, Sep 12, 2022, 6:04 PM UTC

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…

> I have a problem with people running a Tornado Cash-based service that is really just a money laundering service.

The treasury ban is on the contract itself, not TC-based services that people might run.

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

#350

Post by chrischattin » Mon, Sep 12, 2022, 6:04 PM UTC

qeternity wrote: post #283

zionic wrote: post #275

Earlier quoted context omitted.

>They are explicitly a product to facilitate money laundering How is HN so consistently cryptophobic? Imagine the reaction you’d get here suggesting say, E2EE is “explicitly a product for {crime}”. You’d be rightly mocked, but throw in crypto and it’s like 75% of the people here lose basic reasoning skills. I’d be less frustrated if it wasn’t so common.

No, it’s like saying E2EE encryption is designed to secure private communications between two parties, which is what it’s designed to do. Mixers are designed to facilitate money laundering. You can claim it’s for legitimate privacy, etc but it doesn’t change the fact that it’s money laundering.

Cash is a private form of transaction. You aren't inherently money laundering when you use cash.