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U.S. Treasury sanctions virtual currency mixer Tornado Cash
- colechristensen 4y agoDeleted because I can’t read.
- sram1337 4y agothey said "licit"
- bombcar 4y agoAmusingly enough, since most virtual currency activity is simply trading it back and forth on exchanges to try to "make a buck", it's probably mostly "legit" now. What percentage of actual on-chain transactions are not illicit is another question.
- John23832 4y agoThey're saying that most is "not" illicit. No missing "not".
- malfist 4y agoSurprised it took them this long. Tornado is straight up money laundering with the guise of "privacy" and crypto.
- mikeyouse 4y agoAnd most of the North Korean crypto funds have gone through there.. https://www.coindesk.com/tech/2022/04/15/sanctioned-crypto-wallet-linked-to-north-korean-hackers-keeps-on-laundering/ https://www.coindesk.com/tech/2022/04/15/sanctioned-crypto-w...
- deleted 4y ago[deleted]
- eric_cc 4y agoExcept it’s not and you’re 100% wrong. Tornado cash is used by people who buy crypto on centralized exchanges, want to take private self custody of their crypto without the CEX or other entity spying on them.
- mrep 4y agoIf it looks like a duck, swims like a duck, and quacks like a duck, then it probably is a duck.
- SparkyMcUnicorn 4y agoYou could use this same argument against E2E encryption.
- pjc50 4y agoI'm rather surprised that it took this long, given their role in sanctions evasion.
- xapata 4y agoThe nice thing about the blockchain (for law enforcement) is that the transaction history never decays.
- lizardactivist 4y agoDoes it give people a higher degree of freedom, privacy, and control over their money? If so, it doesn't surprise me that the US gov wants to sanction and ban it.
- zaphar 4y agoThe problem with the 'mixer' approach to this is that the US Gov knows the bad money went into the mixer. They also know that it's harder to determine where the bad money came out to. This means that money that all of society has a valid vested interest in tracking and seizing is in the mixer. Part of having that freedom, privacy, and control is having to live with the consequences of doing business with people who land you in circumstances like this. I don't buy any argument that hinges on: * Someone stole my money. * But they used a privacy enhancing service to hide it. * So the authorities have no recourse. If someone uses that service for legitimate reasons knowing that the people who steal money are also using then they just have to live with the fact that their privacy means they can't prove they weren't the ones who stole it.
- ETH_start 4y ago>>* Someone stole my money. * But they used a privacy enhancing service to hide it. * So the authorities have no recourse. The resourse can't be * ban the privacy enhancing service If cash were introduced today, it would be banned under that principle. Real privacy means criminals will use it. That's the price society pays to not give the government enormous surveillance powers.
- pudo 4y agoCurious to see how the crypto world will respond. They'll probably take a minute to realise that being sanctioned is unlike being indicted: if someone is indicted, they have a problem but you can technically keep doing business with them. If an entity is sanctioned, anyone doing business with them (such as handling BTC downstream from Tornado) will face a criminal liability. You will have a problem, and a nasty one. That thing just turned into a hand grenade.
- potatototoo99 4y agoMost crypto already bypasses the US and their laws.
- deleted 4y ago[deleted]
- thehappypm 4y agoI would agree that individual transactions might, be not most entities.
- game-of-throws 4y agoThe linked press releases disagrees. > While most virtual currency activity is licit, it can be used for illicit activity
- ETH_start 4y agoThis should elicit a response from every one who believes in Constitutional rights and internet freedoms. It is now illegal to send transactions to a particular smart contract. Sending a transaction is an act of publishing information, so this means publishing certain information is illegal for Americans. Moreover, the sanctions law empowers the USG to sanction people, and the entities they run, but with this measure, is being misappropriated to prohibit Americans from using neutral privacy tools that no one runs. This marks a significant expansion in the scope of discretionary power wielded by the state, without any legislation authorizing this escalation in powers. Finally, in reaction to the sanctioning of a smart contract address, Github has now removed all code for the Tornado Cash smart contract, and banned any user who has contributed code to it, which further reinforces the argument that this measure is an assault on free speech.
- colinmhayes 4y agoSo how does sanctioning defi work? Isn’t the whole point of it being decentralized to make it unsanctionable? If the government forces exchanges to reject any coin that has ever touched a mixer won’t we just end up in a situation where every coin is unnaccessable given enough time?
- pudo 4y agoYes. Exactly this is happening here, and not in a rhetorical way. And the US government have, you know, guns.
- JumpCrisscross 4y ago> Isn’t the whole point of it being decentralized to make it unsanctionable? Why would this be expected? Cash is decentralized. That didn't prevent countries from sanctioning things.
- colinmhayes 4y agoCash itself has never been sanctioned though? If the government said “we’re now keeping a database of cash serial numbers that are hereby banned” would everyone need to install the “cash checker” app and scan each bill they receive?
- JumpCrisscross 4y ago> Cash itself has never been sanctioned though? Ethereum isn't being sanctioned. Tornado is. If you transact with Tornado, you're in violation of the law. If you don't, you're not, whether you use Ether or not. > if the government said “we’re now keeping a database of cash serial numbers that are hereby banned” would everyone need to install the “cash checker” app and scan each bill they receive? Law enforcement has long used marked bills [1]. The cash isn't "cancelled." If you randomly end up with one, you're fine, in the same way that if you unknowingly end up transacting with a wallet that transacted with a wallet that touched Tornado, you're also probably fine. But if your garage has a box of marked bills, or if your wallet did a big transaction with another wallet that does lots of Tornado activity, you're going to be on law enforcement's radar. [1] https://en.wikipedia.org/wiki/Marked_bill#cite_note-4 https://en.wikipedia.org/wiki/Marked_bill#cite_note-4
- giancarlostoro 4y agoWonder when they will attempt to go after the biggest mixer of all: Monero itself, I often wonder if that's the sole reason CoinBase refuses to add it to their exchange, to avoid the legal hell that would ensue.
- JumpCrisscross 4y ago> the biggest mixer of all: Monero Tornado is a straight up money laundering (specifically, layering [1]) service. Monero can be that. But it's also other things, which makes it at the very least defensible in a way someone interacting with Tornado is not. [1] https://www.stpaulschambers.com/stages-of-money-laundering-explained/ https://www.stpaulschambers.com/stages-of-money-laundering-e...
- grw_ 4y agoI don't think it's fair to say it's exclusively used for money laundering, it surely can be used to obscure the origin of funds but I think 'money laundering' label requires that the motive be financial profit. If you just want to preserve privacy while interacting with ethereum network without financial gain, tornado is a great tool to accomplish that.
- seanw444 4y agoNo, we must ban things that serve multiple purposes if they also serve a use to criminals.
- anotherrandom 4y agoBan cars because they can be used for robbery getaways
- pcthrowaway 4y agoNot Teslas though, because they will snitch on you: https://news.ycombinator.com/item?id=32384827 https://news.ycombinator.com/item?id=32384827
- Ekaros 4y agoSo much for censorship resistance... So what is left?
- PretzelPirate 4y agoIt’s still censorship resistant even after the sanction was put in place. Can you point to what transactions are being censored? People can still use Tornado cash without the US govt being able to stop them.
- anotherrandom 4y agoTornadoCash is left because it's still usable despite the sanctions? This has zero impact on peoples' ability to use the service. Just chain hop a few times with privacy coins if you want to cash out on a cex
- SXX 4y agoNow we just need someone to take some coins from Tornado Cash and send them to top 10,000 or something active crypto addresses like one CoinBase / Binance / etc using... It would be interesting to see what U.S. Treasury will do.
- Ekaros 4y agoI was just wondering same, why not now run them through the major defi products? See the market reaction for fun.
- SXX 4y agoThis will happen sooner or later so this attempt looks totally unenforceable.
- zaphar 4y agoCoinbase just hands the coins over to the Treasury and problem solved.
- SXX 4y agoCoinbase could do it, but if someone sent these "bad" coins to your personal address? Let's say if you're major NFT owner or if you're collecting money for your non-profit via crypto. What I saying is that just for $10,000-100,000 you can literally taint 90% of crypto ecosystem.
- notch656a 4y agoIt wouldn't surprise me if 90% of the crypto with any velocity is already "tainted" TBH. It would be easy to "pepper" everyone's addresses with small (in BTC vernacular satoshi sized) amounts of "tainted" currency, subverting the whole system.
- SXX 4y agoI guess US Treasure not going to be after every satoshi, but large transactions. So it's just gonna make usage of mixers more expensive for huge amounts of crypto as you'll need to split it to small transactions and pay more fees. Also fact that every coin is tainted is a good reason to demand absolutely all data possible from CoinBase and other companies.
- greatjack613 4y agoCan someone Eli5 what this actually means? I mean tornado is anonymous so I can’t see the operators getting screwed. Does it mean people like me who use it so Coinbase can’t track my wallet activity are going to have our wallets banned since we used tornado?
- pudo 4y agoIf you were to send money through tornado from now on, and this was discovered and linked to your identity, you would face a criminal liability in the US.
- daoist_shaman 4y ago
- pudo 4y agoIt is law enforcement working as intended. Freedom is complicated, I guess. Judging from your tone I suspect you'll love this fun fact: amongst other things, this sort of sanctions regime stems from the PATRIOT Act. Beacon of liberty that thing.
- jahewson 4y agoAlso civil liability, which is much easier for the government to pursue you with.
- SXX 4y agoIt means that if you're in US and publicly share your crypto address for vanity like NFT or something anyone can easily make you criminal just by sending you some "bad" coins. Good luck proving to U.S. Treasury it wasn't you. In real world it's most likely gonna be used mostly against big transactions and to go after crypto exchanges.
- reset-password 4y agoThis seems like a strong signal that mixers work as intended. I don't see sanctions being effective as it's a lot easier for someone to create a new mixer than it is for the feds to investigate and sanction one. In either case it'll be entertaining to watch this unfold.
- JumpCrisscross 4y ago> it's a lot easier for someone to create a new mixer than it is for the feds to investigate and sanction one Sanctions enforcement tends to pay for itself. It's hard to create new mixers from prison or when your bank accounts keep getting frozen. (It's easy to set up a cash business and launder money. Most people don't do it. It's still a thriving industry.)
- onlyrealcuzzo 4y agoIIUC, Tornado Cash is open source. You don't need a lot of resources to run your own.
- JumpCrisscross 4y ago> don't need a lot of resources to run your own This is true of all money laundering. Any business that takes cash has everything it needs to cook the books to show phantom income.
- giaour 4y agoIt's a question of scale. Laundering a small amount of money via a business entity that accepts cash isn't hard, but people get caught when they get greedy and start trying to launder implausible amounts. TC clones can probably fly under the radar with a small transaction volume, but any attempt to launder large sums would get caught pretty quickly (with standard forensic accounting techniques used to trace the beneficiaries).
- SparkyMcUnicorn 4y ago
- ETH_start 4y agoThis is an attempt to criminalize privacy. Tornado Cash is a decentralized privacy protocol.
- malfist 4y agoNo, this is an attempt to enforce money laundering laws.
- deleted 4y ago[deleted]
- ETH_start 4y agoBy criminalizing privacy.
- amanaplanacanal 4y agoYou haven't had anything like financial privacy in the US in decades. The bank secrecy act was passed in 1970, FFS.
- ETH_start 4y agoThat applied to intermediaries. This applies to personal use of privacy tools, which is a significant escalation of the criminalization of privacy.
- eric_cc 4y agoA horrible attempt. Tornado cash is used for privacy. Cell phones are used in laundering. Let’s ban cell phones.
- Sargos 4y agoPrivacy and money laundering go hand in hand. You can't have one without the other.
- lima 4y agoSurprising it took them so long.
- deleted 4y ago[deleted]
- kache_ 4y agodear feds: ring signatures signed, n people in a chain of trust that is m long stop fighting, you're not going to win :)
- twstdzppr 4y agoDon't fund North Korea, thanks.
- kache_ 4y agoWho said anything about funding north korea? Just make it illegal to do so. Why does that assume violating my privacy? You actually can't really stop privacy enabled cryptocurrencies. By all means, I'd like to see a concerted effort to do so. (Because poking the bear will just fuel more cryptographic innovation that dodges control :P)
- anotherrandom 4y agoIf I use Tornado Cash, I'm not funding North Korea -- I'm simply using their service. I have no knowledge of who is receiving my stuff and no intent to fund North Korea, therefore I am not funding North Korea. If it happens by accident then oh well, there's no realistic way to tell it happened anyway and there's certainly no way for me to tell it did
- 8note 4y agoYou're ensuring that North Korea can buy stuff with their stolen money. Well, you're going out of your way to make sure that North Korea can buy stuff with their stolen money, by letting them say that it's yours.
- twstdzppr 4y agoUsers of HN apparently have a soft spot for helping oppressive regimes because of privacy, apparently.
- arberx 4y agoWhatever your stance on crypto, privacy should be a fundamental right. Remember, the most privacy-preserving way of trade is dealing with cash, yet no one sees it as "criminal."
- NovemberWhiskey 4y ago... and like most rights, it's not an unbounded one.
- concordDance 4y agoAllowing the US state to violate it might be a case of the cure being worse than the disease.
- NovemberWhiskey 4y agoThe operation of any well-operating nation state is always going to involve limitations on the right to privacy. It's facile to think otherwise. The police need, within certain guardrails, to be able to search private property for evidence during investigations. Civil suits are going to require some element of discovery. Tax authorities are going to need to perform audits. Your landlord is going to need to come into your apartment to fix a leaking pipe if you're away.
- acdha 4y agoWe don’t need to say “might” - this has been the case for ages, and we can see how that’s gone. This looks like Tornado has had enough volume that the Treasury department cares about applying existing laws to it, but fundamentally this doesn’t seem to be different from Visa requiring foreign transactions to follow the U.S. rules.
- newaccount2021 4y ago
- jahewson 4y agoNo, there should be no right to launder money. Just as there is no right to hate speech despite there being a right to speech. Laundering cash is illegal too!
- lysergia 4y agoThe Treasury should setup several mixer honeypot services to find out who’s tumbling dirty money. This would be far more effective and would turn people off using mixers (at least for a while) and would uncover a vast criminal network.
- i67vw3 4y agoI predicted it 3 months back https://news.ycombinator.com/item?id=31288544#31291943 https://news.ycombinator.com/item?id=31288544#31291943 Mixers are really great at doing stuff they claim to do, and they do work as intended. Tornado.cash was next no matter what, it was just 'when'.
- xeromal 4y agoHaha! Nice job! I love seeing someone proven right.
- rvz 4y agoAnything aiding privacy such as privacy coins, mixers, etc will be banned by the exchanges, authorities and other centralized entities which can detect that the coins have been through a mixer. Given that many regulators have already banned and delisted some privacy coins from being exchanged, it is not a surprise to see Tornado.cash and other mixers also being banned by exchanges.
- jsmith45 4y agoIt is worth noting that the Treasury clearly indicates that the concept of a mixer while inherently risky, could be fine designed such that it can't easily be used for illegal money laundering. For example, if a smart contract mixer was designed to hold incoming funds in abeyance until the submitter contacts the operator, provides proof of identity, proof of source of funds, etc, and once everything is checked out was finally given some signed token that they can send to the mixer to release the funds from abeyance, at which point it starts getting mixed with other transactions, that might potentially be acceptable. The checking needed is to stay on the treasuries good side is probably slow and complex (and require the operator to take a substantial fee), possibly to the point where no such mixer could get enough transaction volume to actually function, but it is in principal possible. Note this works even when the contract's design is such that the operator cannot possibly determine which output comes from which inputs. But Tornado Cash by design cannot do anything to even attempt to prevent criminals from using it, which is why it got sanctioned.
- Scoundreller 4y ago> As a result of today’s action, all property and interests in property of the entity above, Tornado Cash, that is in the United States or in the possession or control of U.S. persons is blocked and must be reported to OFAC. > In addition, any entities that are owned, directly or indirectly, 50 percent or more by one or more blocked persons are also blocked. > All transactions by U.S. persons or within (or transiting) the United States that involve any property or interests in property of designated or otherwise blocked persons are prohibited unless authorized by a general or specific license issued by OFAC, or exempt. > These prohibitions include the making of any contribution or provision of funds, goods, or services by, to, or for the benefit of any blocked person and the receipt of any contribution or provision of funds, goods, or services from any such person. (Formatting added because I’m not a moron) Seems like you can continue using it if you’re not in the US, not transacting with someone that is and not with anyone on their sanctions list? Assuming the operators aren’t in USA and aren’t running transactions there. If this is a decentralized app, how is a miner supposed to avoid crunching these processing cycles? Not a lawyer
- JumpCrisscross 4y ago> if you’re not in the US, not transacting with someone that is and not with anyone on their sanctions list? And not in a country that extradites to the U.S., or every planning on going through one. Or using U.S. dollars. Or the currencies of its allies. This is OFAC. Violating its sanctions is akin to doing business with North Korea or Iran. People do it. But you're going to have a different lifestyle.
- Scoundreller 4y agoI didn’t see that. Could a Canadian continue to pay their Canadian neighbour for mowing their lawn through tornado or not?
- JumpCrisscross 4y ago> Could a Canadian continue to pay their Canadian neighbour for mowing their lawn through tornado or not? They’d get arrested and lose all their money. So in practice, no.
- maerF0x0 4y ago"First they ignore you, then they laugh at you, then they fight you, then you win." -- misattributed to Ghandi
- WJW 4y agoGandhi had the benefits of the English being war-weary after WW2 and the world being swept by a wave of anti-colonialism at the time. Quite often it actually ends well before the "you win" stage. The "Occupy Wall Street" people never really got further than step 1, for example.
- maerF0x0 4y agoYes, it' definitely not a law of physics. It's an adage of value for a reason though too. It's about perserverance, if you can tolerate the previous steps indefinitely then there's a high probability you'll arrive at a later step. I would say Occupy got at least to step 2 or 3 before they gave up.
- WJW 4y agoI thought of a better example: Fidel Castro surely persevered right up until the end, but despite leading Cuba for almost 50 years it's a stretch to say he "won" in any significant way against the US.
- Ekaros 4y agoCuba still does not have puppet regime installed by USA... So in that sense they did not lose.
- deleted 4y ago[deleted]
- latchkey 4y agoI wonder if this will finally create a market for freshly minted coins.
- firloop 4y agoLess than a month ago, Vitalik Buterin deposited 220 ETH into Tornado Cash. source, 4 transactions: 100 ETH - https://etherscan.io/tx/0xd8d586ad33434be0f51c5c9d6996b1c8b208b04155683eee377849b67a0b13cd 100 ETH - https://etherscan.io/tx/0xfeb399764590a7c1ca321492b4634ceba530093d43d814aa1c5afdf3fa03b092 10 ETH - https://etherscan.io/tx/0x0f82d42f6d455f3b745be670a04d37a254d02a4b1ae35af967ed7d90de34ffdc 10 ETH - https://etherscan.io/tx/0x98c40bdde8edd84ba4c483bfca447bb3209957c1be90582d5fbf8630845df814
- bhouston 4y agoWhat was his explanation?
- ptero 4y agoWhy should he care to provide one? Honest question.
- anonporridge 4y agoWhy do you need an explanation for seeking privacy? Guilty until you can prove your innocence?
- hanniabu 4y agoSadly a good portion of HN thinks blockchain is only used for money laundering and will be completely fine with this subversion of rights
- pjc50 4y agohttps://en.wikipedia.org/wiki/Unexplained_wealth_order https://en.wikipedia.org/wiki/Unexplained_wealth_order ; the US does this via in rem actions e.g. https://en.wikipedia.org/wiki/United_States_v._$124,700_in_U.S._Currency https://en.wikipedia.org/wiki/United_States_v._$124,700_in_U... More generally, see https://news.sky.com/story/us-cryptocurrency-developer-jailed-for-helping-north-korea-evade-sanctions-12589205 https://news.sky.com/story/us-cryptocurrency-developer-jaile... ; it was inevitable that as the value involved in cryptocurrency increased, it would reach the threshold where "no you are not allowed to provide aid to enemies of the United States" became a serious consideration.
- latchkey 4y agohttps://twitter.com/SecBlinken/status/1556661834287140868 https://twitter.com/SecBlinken/status/1556661834287140868 We will continue to aggressively pursue actions against currency mixers laundering virtual currency for criminals. Today, @USTreasury sanctioned virtual currency mixer Tornado Cash, which is a U.S.-sanctioned, DPRK state-sponsored hacking group, used by the DPRK to launder money. Except it is a Russian guy. https://twitter.com/semenov_roman_ https://twitter.com/semenov_roman_
- jjulius 4y agoYou'll note that, in the first paragraph of the US Treasury announcement that this thread is about, it says: >This includes over $455 million stolen by the Lazarus Group, a Democratic People’s Republic of Korea (DPRK) state-sponsored hacking group that was sanctioned by the U.S. in 2019, in the largest known virtual currency heist to date. There's nothing preventing one country from supporting or using a hacker group in another country.
- 29083011397778 4y agoThe implication being that America can't sanction a Russian dude, and North Korea can't sponsor him, or use a service he provides?
- deleted 4y ago[deleted]
- DantesKite 4y agoHe deleted the tweet lol.
- latchkey 4y agoGood thing the internet remembers. https://web.archive.org/web/20220808155413/https://twitter.com/SecBlinken/status/1556661834287140868 https://web.archive.org/web/20220808155413/https://twitter.c...
- latchkey 4y agoUpdate: the 'fixed' version: https://twitter.com/SecBlinken/status/1556677862345801728 https://twitter.com/SecBlinken/status/1556677862345801728
- whatisweb3 4y agoPretty dumb but not surprising. Private transactions should not be something that is criminalized, but it is taking a trajectory like reefer madness and the drug war. User seeking financial privacy is now put in the same group as terrorists. Reminds me of arguments being made by governments around tightening the use of end-to-end encrypted chat apps. Since this is a decentralized application running as an Ethereum smart contract with IPFS[1] interface, the move will not actually deter any state actors from using this, but will criminalize and stigmatize regular users who want to anonymize their Ethereum transactions. The end result may be as the government wants: force users back to fiat so they can maintain maximum control of funds, and anyone left in the mixer is default a criminal. [1] ipfs://QmU3j1B1UagFbfqgwWBu3yk1La657y8hoGoA24fG3QpPjf
- tantalor 4y agoIf crypto mixers are outlawed, only outlaws will use crypto mixers. This doesn't actually sound so bad. If you seek transactional privacy, then maybe don't use global systems. Try back alley instead.
- whatisweb3 4y agoUsers will be forced into other systems that are less tested and less regulated, forced to tie their wallet to the public ledger, or forced to pay high fees to centralized exchanges to achieve similar privacy. One compromise would be a US-based smart contract mixer that provides strong privacy but allows the US government to request transaction history in extreme cases. These addresses can then be sanctioned, frozen by USDC and barred by all regulated CEX.
- uncomputation 4y agoThat’s not a compromise at all to me. That’s total capitulation. Once any party has the right to sanction or ban and CEX comply with government orders, what is the point?
- whatisweb3 4y ago
- 71a54xd 4y agoI'm surprised a DAO hasn't been established to effectively "fork" mixer code into a new org every time an existing mixer is investigated or sanctioned. Ironically, I'd bet the creators of Tornado Cash will simply auction their codebase to the highest bidder - an NFT owning the source code of a mixer could be a really interesting passthrough entity if you were simply "licensing" access to the NFT...
- WFHRenaissance 4y agoThe code is already public on IPFS I think.
- deleted 4y ago[deleted]
- nootropicat 4y agoThis is why PoS is a must. There's no way to hide industrial mining facilities and miners will be eventually forced to enforce sanctions. A validator even with 100k eth just needs a connection, trivial to hide.
- 0x64 4y agoPoS is coming in ~a month, the upgrade dates date will be announced on Thursday.
- sam0x17 4y agoDo they even know who they are, or is this more like a strongly worded letter? edit: It's a russian guy, in russia, so in practice might be more like a strongly worded letter. Downstream effects are more like financial institutions are going to block assets that appear to have gone through this mixer, but I have my doubts that that is practical, especially if the mixer ups the complexity.
- olalonde 4y agoI like how they made absolutely no attempt to clarify what it means to sanction a smart contract. So many questions... > As a result of today’s action, all property and interests in property of the entity above, Tornado Cash, that is in the United States or in the possession or control of U.S. persons is blocked and must be reported to OFAC. My understanding is that it is now illegal for U.S. people to use the Tornado Cash smart contract. Given that Ethereum is pseudonymous, I'm not sure how they plan to enforce that, but I guess they could catch people who use it directly through a KYCed account (e.g. Coinbase). > All transactions by U.S. persons or within (or transiting) the United States that involve any property or interests in property of designated or otherwise blocked persons are prohibited unless authorized by a general or specific license issued by OFAC, or exempt. This is also not clear. Are people who use or have used Tornado Cash now designated/blocked persons? Or is the smart contract itself the "blocked person"? If the former, how is that even possible to enforce? U.S. persons are no longer allowed to accept coins that can can be traced back to Tornado Cash usage in the past? What are they supposed to do with the "tainted" coins? Send them to the U.S. Treasury? Destroy them? Or are you supposed to ask your customers if they have used Tornado Cash in the past? What if they lie? etc. If the latter[0], it would mean that it's illegal for U.S. persons to accept transactions originating from the Tornado Cash smart contract. But that can be bypassed trivially by going through an intermediary address before sending the ETH. [0] I believe that interpretation is more likely given that they gave a list of addresses: https://home.treasury.gov/policy-issues/financial-sanctions/recent-actions/20220808 https://home.treasury.gov/policy-issues/financial-sanctions/...
- Seattle3503 4y agoPerhaps it will make it harder to do things like pay for the tornado.cash domain name and hader to pay for hosting. In that case the website would need to move to something like IPFS, which would make it less accessible and reduce the anonymity pool.
- anotherrandom 4y agoThe issue here is that essentially nobody who has used/uses Tornado Cash is technologically inept enough to not know how to use something spun up as an onion service or eepsite (would help lessen the severity of the reduced anonymity issue), if the tornado cash folks don't just use IPFS to host. Regardless, the website is merely a GUI to make things easier and not necessary for functionality in this case... or is it somehow necessary?
- formerkrogemp 4y agoWhen the regulations catch up, the crypto scams won't have as much traction, and billions will still have been scammed and laundered.
- gfodor 4y agoHaha I read “sanctioned” as in “endorses” and was very, very confused.
- parasense 4y ago>While the purported purpose is to increase privacy, mixers like Tornado are commonly used by illicit actors to launder funds, especially those stolen during significant heists. Think about the children!
- deleted 4y ago[deleted]
- legutierr 4y ago> All transactions by U.S. persons or within (or transiting) the United States that involve any property or interests in property of designated or otherwise blocked persons are prohibited unless authorized by a general or specific license issued by OFAC, or exempt. These prohibitions include the making of any contribution or provision of funds, goods, or services by, to, or for the benefit of any blocked person and the receipt of any contribution or provision of funds, goods, or services from any such person. So, it seems that it is prohibited for US persons to send tokens to these smart contracts, or to withdraw tokens from these smart contracts. What about miners running in the United States? Are US-based miners also prohibited from producing blocks that include transactions that interact with these smart contracts? And what about blocks that are produced by non-US miners, and which contain transactions that interact with these smart contracts? Might US-based miners be prohibited from validating and building upon such blocks? Does US law effectively now mandate a fork of Ethereum so that US persons can safely interact with a blockchain that excludes all interactions with Tornado smart contracts? It seems like an extreme implication, but can the possibility be excluded?
- notch656a 4y agoJust another tool for sweeping discretionary prosecution. Rest assured the government can get pretty much anyone on something civil rights destroying if they like.
- Canada 4y agoIn terms of mining transactions, the Ethereum proof of stake system will financially punish anyone who fails to attest to honest transactions, and there's no escaping that just because "sanctions". See this post for details: https://0xfoobar.substack.com/p/ethereum-proof-of-stake https://0xfoobar.substack.com/p/ethereum-proof-of-stake I believe we'll likely see other actions taken by US companies, such as Twitter banning the Tornado Cash account, Microsoft deleting its github repositories, the registrar of its current domain name disabling it, Discord kicking it off, and so forth. Perhaps large RPC providers refusing calls involving the sanctioned addresses, though I think that's less likely. We will also see an escalation of fiat enabled exchanges refusing to do business with users who bring assets from Tornado Cash connected accounts, however there are other developments in the pipeline that will mitigate this, and increased aggression by proponents of financial exclusion will drive adoption as they are a real pain for legitimate actors too, and also these systems are necessary to increase transaction throughput anyway. (eg. rollup protocols on Ethereum, lightning network protocols on Bitcoin)
- sampa 4y agoThe Worse, The Better (c) Lenin
- bsedlm 4y agoif money is fungible, how come it can be dirty xor clean?
- djschnei 4y agoWhen the guys with guns say so.
- iameli 4y agoI'm not, like, against the idea of sanctioning North Korean hacking groups. But the regulators here aren't really prepared for the crypto endgame. I could clone Tornado.Cash's contract code in half an hour; would my new deployment also be sanctioned? What about if Ethereum migrated to some kind of ZK-EVM and _all_ of the transactions are suddenly private and untraceable? Other chains already have some of these properties. I dunno. I don't think I particularly want to live in a world where it's essentially impossible to regulate money. But I don't really see how to avoid it anymore.
- JumpCrisscross 4y ago> would my new deployment also be sanctioned? No. But it would be illegal. Do you think nobody thought of this in the millennia we used cash and commodity money?
- iameli 4y agoUsing it to actually launder money would be illegal, sure. What crime am I committing by deploying the contract?
- MacsHeadroom 4y agoPrivate transactions are not illegal and neither is creating or cloning a tool which facilitates them. Failing to disclose the commercial effects of those transactions on your own tax liability to the IRS is illegal. But that's orthogonal to cloning or using a tool which facilitates transaction privacy.
- JumpCrisscross 4y ago> Private transactions are not illegal They aren’t. But anyone using an open tumbler like Tornado is choosing to live a life of continuous arrest and asset freezing. Because while private transacting isn’t illegal, using a money laundering service will continuously put you on overlapping law enforcement radars, and all it takes for a mixer to become a money launderer is the wrong person to use it, something users can’t control. (If you’re the one deploying these services, lol, good luck.)
- jollyllama 4y agoSo it's not a currency for tax purposes, but it is subject to the same money laundering rules as a currency. The worst of both worlds.