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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

#391

Post by marcus_holmes »

ashwagary wrote: post #354
marcus_holmes wrote: post #127

Earlier quoted context omitted.

> What's the difference between money launderying features and privacy features? Really good question. I'd say "if your privacy feature allows you to trade above the trigger limit (usually 10K USD/EUR/GBP) without having to state the source of your funds, then it's actually a money laundering feature"

If the funds aren't procured through criminal activity, then it can't be considered money laundering. Only if the individual doesn't declare a taxable event to a tax authority has a crime been committed.

no, it's money laundering even if the funds haven't been procured from criminal activity. The regulations don't care where the money comes from, they're just specifying what reporting needs to happen around the movement of money. Not being able to properly describe where the money comes from is a crime.

I've worked in the finance industry, and I've worked with people who've seen bad guys turn up with suitcases full of other people's money. I'm totally happy that these regulations are in place.

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

#392

Post by rglullis »

hef19898 wrote: post #249
rglullis wrote: post #236

Earlier quoted context omitted.

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.

Don't get confused by the terminology and don't get into word-thinking. A "contract" on the blockchain is nothing like a "contract" in the legal sense. Even if I get your signature on a blockchain saying that you are transferring your assets to me, there won't be any court willing to uphold this. In the same vein, it's not because that people talk about TC as a smart contract that gives it legal backing or makes it subject to the legalities of a "real world" contract.

You could call it "stored procedures" if you prefer, but at the end of the day outlawing tornado cash based on its code is as ridiculous as outlawing RSA.

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

#393

Post by logicalmonster »

wizofaus wrote: post #378
ls15 wrote: post #367

Earlier quoted context omitted.

> I struggle to find a legitimate use case for hiding transactions from your bank and thus tax authority (assuming a developed country). Roe v. Wade

I assume you mean the overturning of and the lengths to which certain states appear to be going in order to determine whether women have attempted to have now-illegal abortions? I'd agree that's a pretty reasonable example of why we still need the ability to pay for things in an untraceable manner and why to object to any attempt to phase out cash as a legitimate method of payment. But I'd also much rather have const…

> But I'd also much rather have constitutional protections that don't allow governments to declare consensual surgical procedures on your own body to be illegal.

Interesting concept, but a few quick thoughts on this.

1) I'd only point out that there exists a point of view that that says that a baby's body is a separate life from a woman's body.

2) Such a constitutional protection would open up some very complicated issues when it comes to children, particularly with regards to sexuality.

3) Many of the same people who very eloquently speak out on personal choice in some medical matters "lost the plot" during Covid. Who can credibly make this argument and advocate for such a policy credibly?

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

#394

Post by rglullis »

chollida1 wrote: post #294
rglullis wrote: post #236

Earlier quoted context omitted.

Quoted post unavailable.

https://medium.com/@blockchain101/the-basics-of-upgradable-p... You put in a proxy contract that just sends the money back to the user who sent it to you. Problem solved for sanctions.

To put a proxy contract means that there will be an admin able to make contract upgrades. IOW, you need to have offchain trust in the contract deployer. This is widely regarded as a measure that defeats the purpose of decentralization.

So, yes, you could have an upgraded version of TC, but if you want to go that route you might simply use a centralized exchange as a mixer.

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

#395

Post by ccooffee »

notch656a wrote: post #336
wcfields wrote: post #284

Earlier quoted context omitted.

> ban cash Well, it's not banned, but over $10k USD in cash you need to fill out an IRS form 8300 [1] precisely to curb criminal use of cash. (Although I'd argue it should be upped and pegged to inflation as 10k isn't what 10k used to be.) [1] https://www.irs.gov/businesses/small-businesses-self-employe...

Wouldn't filing a form 8300 be unconstitutional violation of the 5th amendment if the cash is an element of the crime of both parties? As an example, felons can't be charged with NFA violations for owning a short barrel rifle for example because registering their firearm would be self-incrimination. I believe Timothy Leary also got out of being charged with Marijuana reporting [tax] requirement because filing for the…

I have NEVER heard of any of this. Can you provide any sources?

I think the 5th has been restricted enough by the courts that it literally only matters if you EXPLICITLY invoke it. (At least this is my understanding of Berghuis v. Thompkins.)

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

#396

Post by woodruffw »

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,…

You're addressing 18 USC 1956 (a)(1)(A)(i) and (a)(1)(B)(i).

I'm concerned with (a)(1)(B)(ii), which concerns reporting requirements. The kind of financial transactions that Tornado Cash enables are fundamentally incompatible with the US's Federal reporting requirements.

My understanding of the Dutch criminal code (which is not great!) is that their standard is even weaker: it is sufficient to demonstrate mere concealment, not a failure to meet particular reporting requirements.

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

#397

Post by danaris »

devoutsalsa wrote: post #386
JumpCrisscross wrote: post #183

Earlier quoted context omitted.

> somehow I shouldn't be allowed to hide my transactions from randoms on the internet You can do this. But it doesn’t come without risk. If you kept using Tornado even after it was found Pyongyang used it to launder money, yes, you lose your money. It’s analogous to local law enforcement announcing a laundromat has been laundering money for the mafia, and then—months later–someone getting upset the clothes they dropp…

People still use JPMorgan Chase and HSBC, both of which have been involved in money laundering. https://www.icij.org/investigations/fincen-files/global-bank...

1) Those are major banks. Many thousands of people have accounts with them for 100% legitimate purposes, and most of them have likely not heard that they were involved in money laundering (which, see also #2)

2) Because those are major, highly entrenched banks, they not only have the resources to ensure that stories about them engaging in bad behavior get swept under the rug (which doesn't mean "no coverage", but does mean they don't get covered as much as they might perhaps deserve), they also have the connections to make it very unlikely that they will face any kind of meaningful repercussions for this.

This is quite unfortunate, and a decidedly negative aspect of our current system. But the answer to it is not "so other companies like TornadoCash should be allowed to break the law with impunity, too!" It's "so we need to find ways to change our system so that we can genuinely hold accountable big banks and others who currently break the law with impunity."

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

#398

Post by downandout »

woodruffw wrote: post #396
downandout wrote: post #321

Earlier quoted context omitted.

"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,…

You're addressing 18 USC 1956 (a)(1)(A)(i) and (a)(1)(B)(i). I'm concerned with (a)(1)(B)(ii), which concerns reporting requirements. The kind of financial transactions that Tornado Cash enables are fundamentally incompatible with the US's Federal reporting requirements. My understanding of the Dutch criminal code (which is not great!) is that their standard is even weaker: it is sufficient to demonstrate mere concea…

At least under US law, intent is still required. Meaning that while some users of TC may have violated this law, the devs did not, nor did they knowingly aid in it or have any provable intent to do so.

I don't know what Dutch law says with regard to intent/knowing participation, but I suspect that any system of laws in a civilized country would generally require it for criminal convictions.

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

#399

Post by bpodgursky »

null0pointer wrote: post #379
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.

Although I agree that this is a morally good usage of TC, I think that given the intent of using TC is to avoid retaliation from the Russian government it would probably be considered illegal in the users jurisdiction. A better example might be to pay for a legal service without revealing your entire wallet balance to that service.

The Russian government sent FSB agents to kill dissidents in the UK.

They kill people wherever they want to kill people, and it's entirely reasonable to be afraid even if you don't live in Russia.

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

#400

Post by wizofaus »

logicalmonster wrote: post #393
wizofaus wrote: post #378

Earlier quoted context omitted.

I assume you mean the overturning of and the lengths to which certain states appear to be going in order to determine whether women have attempted to have now-illegal abortions? I'd agree that's a pretty reasonable example of why we still need the ability to pay for things in an untraceable manner and why to object to any attempt to phase out cash as a legitimate method of payment. But I'd also much rather have const…

> But I'd also much rather have constitutional protections that don't allow governments to declare consensual surgical procedures on your own body to be illegal. Interesting concept, but a few quick thoughts on this. 1) I'd only point out that there exists a point of view that that says that a baby's body is a separate life from a woman's body. 2) Such a constitutional protection would open up some very complicated i…

Well I have no desire to turn this into an abortion debate, but it certainly concerns me how easy it is in a country like the US for governments to criminalise women's personal health decisions. But mainly it is a reminder that there likely will always be legitimate reasons to hide your activities from authorities in certain cases.
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