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Investors sue Treasury Department for blacklisting crypto platform Tornado Cash

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

#431

Post by nevi-me »

tmpz22 wrote: post #213

Can anyone defending Tornado Cash provide a concrete example of mixing crypto revenues in a way that is not clearly illegal? I've scrolled this whole thread, and there are a lot of people defending it, but none of them provided a full e2e example of "I sell x to y, y can only use crypto, y will be persecuted if I don't obscure my transactions from z, so therefore this is a good thing" Yes we can all do the hypothetic…

I get paid in crypto. My colleagues don't know how much I earn. If any of them discovered the address I'm paid into, they'd know my salary by looking up my address.

I see the need for privacy in this instance.

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

#432

Post by TremendousJudge »

andrewaylett wrote: post #341
woodruffw wrote: post #87

Earlier quoted context omitted.

> 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…

What's wrong with Victorinox?

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

#433

Post by jdmichal »

TacticalCoder wrote: post #383
300bps wrote: post #344

Earlier quoted context omitted.

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

Structuring though is one of the dumbest, laziest and most arbitrary law ever. If you say that the limit is, say, max 100 K USD for something but plan to attack for structuring the person who did 5 times 100 K USD, then simply make the law clearer: make the law say 100 K USD max and, say, max 200 K USD over five years. But don't come after people who did respect the numbers written in the law for "structuring". It's…

Your real estate example is not a great fit, because real estate transfers are not common. That particular tax-free status on the transfers would probably be best interpreted as a carve out or loophole, with the normal status being that the transactions should be taxed.

On the other hand, depositing money is the normal status. Depositing what amounts to large sums over arbitrary periods of time is also normal. Directly to the point, the limit in place is not a restriction, but merely one that triggers mandatory reporting. The limit is very clear and absolute -- though at their discretion banks may report smaller transactions. Structuring is specifically about avoiding that limit and the accompanying questions and reporting.

So how would you rewrite this law to require mandatory reporting, but also not allow structuring? Because it's not apparently trivial how to achieve that goal any better than they did.

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

#434

Post by TremendousJudge »

notch656a wrote: post #312
the_snooze wrote: post #262

Earlier quoted context omitted.

>No, Tornado Cash is code, not a service operated by any entity. This is the kind of sociopathic irresponsibility that's too common in tech. "Oh, it's not my fault my lab-grown monster decided to terrorize the countryside!"

OFAC's attacks on privacy are sociopathically irresponsible, and unlike Tornado Cash the federal government has actual monsters with weapons terrorizing the countryside.

Good thing we have the North Korean government and CP traders on our side, defending our rights.

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

#435

Post by 300bps »

downandout wrote: post #410
300bps wrote: post #407

Earlier quoted context omitted.

[Casinos] don't have the intent to aid in these activities though, which is why they are allowed to operate. Casinos are allowed to operate because not only do they not have the intent to aid these activities, they happily track and report everything they're required which is just as much as a bank is required. They aren't the hotbed of money laundering you seem to think they are. https://www.fincen.gov/resources/sta…

They aren't the hotbed of money laundering you seem to think they are. I spent a fair amount of time in the gaming business, and I can tell you that this statement is patently false. Very little of it gets caught, because the people involved in such schemes know what the rules are and simply work around them. Casinos themselves also sometimes turn a blind eye to such activity when it is especially profitable for them…

There really seems to be a lot of mental gymnastics going on here.

Your original point was that casinos are allowed to operate because of their "lack of intent". I respond that it's actually because they're as heavily regulated as banks are. Your response is, "But sometimes they break the law!"

Who cares? Casinos are heavily regulated and most of the time they follow their regulations. Or they would be shut down.

And here we go back to the real original point... what regulations were Tornado Cash following? Were they ever following AML/BSA regulations? Did they do anything significant to attempt to comply with regulations that all money exchange companies have to comply with?

Seriously, take 2 minutes and read this:

https://home.treasury.gov/news/press-releases/jy0916

Your little example of Casino money laundering was $47 million and was touted as “the largest all-cash, up-front gambler the Venetian-Palazzo had ever had to that point,”.

Now read that link from treasury.gov:

Tornado Cash, which has been used to launder more than $7 billion worth of virtual currency since its creation in 2019. This includes over $455 million stolen by the Lazarus Group, a Democratic People’s Republic of Korea (DPRK) state-sponsored hacking group

It's not even comparable. $47 million is 0.6% of $7 billion. Tornado Cash's raison d'être was money laundering and it was right to shut them down.

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

#436

Post by salawat »

realce wrote: post #173
salawat wrote: post #144

Earlier quoted context omitted.

https://bsaaml.ffiec.gov/references/regulations Here ya go. By the by, all of this is to be known or planned out before becoming a money transmitter . I.e., if you cannot do this, you are not legally allowed to serve as a money transmitter .

But - here ya go - crypto is not money, it's real property. Tornado cash is not a bank, it allows you to swap random Pokemon cards between its' users.

https://www.fincen.gov/sites/default/files/2019-05/FinCEN%20...

Here ya go.

If you use Pokemon cards in such a way as there is a reasonable expectation they may get converted back to dollary-dos, you are required to track that too. Sorry mate. Nice try. But no.

Thank you, come again.

I get it. It's frustrating. If only the means of exchange wasn't such a pivotal part of criminal enterprise, or people would just not do illegal things, we could have nice things. Alas, tis not the case.

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

#437

Post by ChrisLomont »

downandout wrote: post #403
woodruffw wrote: post #401

Earlier quoted context omitted.

(B)(ii) does not require specific intent. It requires knowledge that the transaction fails to meet reporting requirements. The intent in question is manifested in Tornado Cash's design, which doesn't pass the malfeasance smell test: you can't absolve yourself of illegality by automating the illegality.

The intent in question is manifested in Tornado Cash's design, which doesn't pass the malfeasance smell test: you can't absolve yourself of illegality by automating the illegality. Given that it also has legitimate uses, I think that's a very difficult case to make. Also, with very limited exceptions, nearly all crimes in the US require intent and/or knowing participation. It's a fundamental tenet of our system. Ther…

>Given that it also has legitimate uses,

You're not addressing the point about "(a)(1)(B)(ii), which concerns reporting requirements".

If they cannot meet US law for reporting requirements, then they are breaking the law, right?

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

#438

Post by mrsteveman1 »

lawn wrote: post #311
tmpz22 wrote: post #213

Can anyone defending Tornado Cash provide a concrete example of mixing crypto revenues in a way that is not clearly illegal? I've scrolled this whole thread, and there are a lot of people defending it, but none of them provided a full e2e example of "I sell x to y, y can only use crypto, y will be persecuted if I don't obscure my transactions from z, so therefore this is a good thing" Yes we can all do the hypothetic…

Do you know that crypto is normally completely traceable? So if I for instance withdraw 100 million from an exchange, in a completely legal manner, and then visit a store or webshop to buy something with the same funds, then the store now knows that I have 100 million dollars? Mixing can be used for self protection.

> So if I for instance withdraw 100 million from an exchange, in a completely legal manner, and then visit a store or webshop to buy something with the same funds, then the store now knows that I have 100 million dollars?

The more common this example of legitimate use becomes, the less useful it is, defeating the purpose.

If it becomes common for crypto known to have come from Tornado to be there because the person is concealing ownership of a large amount of crypto, the store can infer the same thing the previously could see on-chain: this person probably has a large amount of crypto. And then all the same risks apply, albeit with a minor unknown as to the amount.

But since we're basically talking about a "rubber hose" attack here it doesn't really matter if they can directly see it on-chain, they're still going to assume it and likely do the same thing.

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

#439

Post by ChrisLomont »

str4d wrote: post #390
woodruffw wrote: post #374

Earlier quoted context omitted.

What project? PGP was bundled up and thrown onto the Internet; there was no development or services community established around it. The US Government threw a hissy fit over that and they ended up distributing it as a "book" instead, converting it into a question of free expression. There is no meaningful sense in which PGP could ever be said to "facilitate" terrorism in the same way that Tornado Cash is rightfully c…

> Tornado Cash is a service, _run by an individual_ who was warned to cease serving sanctioned entities, and failed to do so. This is false. The (vast majority of the) Tornado Cash contracts were either deployed to Ethereum as immutable contracts, or updated in 2020 to revoke mutability (once the final zkSNARK parameters were included) [0], meaning that they could not later be updated by the user(s) that deployed the…

>The (vast majority of the) Tornado Cash contracts

Thousands of little contracts doesn't absolve a financial institution from a few many-billion dollar illegal transfers, especially after they've been warned repeatedly.

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

#440

Post by ChrisLomont »

hef19898 wrote: post #198
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…

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…

Deutsch Bank has been hit with $600M for laundering, $7.2B over mortgage assets, $2.5B for interest rate manipulation, among a lot of other fines.

These are some pretty astounding sums.

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