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This 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

This 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 ago
  IIUC, 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 ago
      It'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
    Running your own is pointless, unless a bunch of other people also use it.
- anotherrandom 4y ago
  TornadoCash is a smart contract, so there is not really a way to enforce the sanction. Plus, there is not really a way to tell who creates a smart contract if you cover your tracks well enough. This sanctions stuff is smoke and mirrors for the government to try and convince themselves they are capable of doing something. The most realistic approach is for major chains to go POS and the major validators and other important pieces of the puzzle to need a lot of resources to the point where they become businesses and are on the governments radar (and by extension they would need to comply with regulations). But because everyone knows that is a natural consequence of POS, it is exactly why no reasonable person would be on board with a transition to it.
  - landemva 4y ago
    What are your thoughts about Liquid on BTC? https://blockstream.com/liquid https://blockstream.com/liquid
  - nootropicat 4y ago
    >other important pieces of the puzzle to need a lot of resources to the point where they become businesses and are on the governments radar (and by extension they would need to comply with regulations). >But because everyone knows that is a natural consequence of POS, it is exactly why no reasonable person would be on board with a transition to it. You described mining - public companies operating big industrial warehouses with miners. PoS is the opposite - it needs next to zero physical resources. No reasonable person can support PoW unless they support totalitarianism. There's no way to make PoW resistant to government interference.
toomuchtodo 4y ago
It’s all fun and games until you can’t transit the airspace or soil of the US or one of their allies. Sanctions need not have immediate effect, only eventual consistency. https://xkcd.com/538/ https://xkcd.com/538/
nojito 4y ago
How so? We already know that the US has technology to track mixed transactions.
- janandonly 4y ago
  Laura Shin’s recent book about the old Ethereum DAO hack claims that by means of some kind of chain analysis the feds were able to point to a guilty person. But no details have been published on the mechanics of this “de-mixing”. Possible it has to do with sloppy change address reuse in Wasabi?
  - nojito 4y ago
    Most of the information in crypto cases is highly redacted to keep the methods and means of how they track transactions secret.
yunohn 4y ago
> a lot easier for someone to create a new mixer No, it’s really not. Mixers need liquidity, which means they need popularity and volume. That’s not overnight.
WJW 4y ago
> it's a lot easier for someone to create a new mixer A secondary effect of sanctions is indicating what the regulators do and do not consider illegal. Up until now, it was at least marginally possible to state "But I didn't know it was illegal. TornadoCash was doing the exact same thing for years and never got into trouble". After this ruling, that excuse no longer applies and that might dissuade a lot of people who might otherwise be tempted to run a mixer of their own. Also, reputation counts for a lot when it comes to mixers. A mixer that has existed for years is probably legit, a mixer that started up yesterday is a lot more likely to be a rugpull. Even if it will come down to whack-a-mole with the Treasury sanctioning new mixers as they pop up, it might be very difficult for any individual mixer to build up enough reputation to attract significant business.
- deleted 4y ago
  [deleted]
- vl 4y ago
  TC mixer is different though, it’s smart contract/zero proof based. Once it’s deployed, it just continues to work. Owners can’t steal funds. If you believe that smart contract is implemented correctly, you can continue to use it. TC utility is diminished by other fact - TC is blocked on exchange level, exchanges do not accept funds coming from TC smart contract.
  - bergenty 4y ago
    On a tangent, are smart contracts automatically “open source” - as in anyone can see the source or is there a way to obfuscate what’s on the blockchain?
    - soco 4y ago
      I thought one of the selling points was that everybody can check the contract...
      - saurik 4y ago
daoist_shaman 4y ago
I can only imagine what a round table discussion with the Joint Chiefs of Staff sounds like. "Sir, the hacker groups seem to love this thing we've only recently identified as 'FOSS.' It's surfacing to be an existential threat to our CONOPs. I'm requesting your approval to authorize immediate sanctions against the FOSS threat."
- _fat_santa 4y ago
  Richard Stallman appears on horseback. Charging into battle to open the source to his favorite printer drivers.
- vkou 4y ago
  Would you prefer it to be: 'Oh, shucks, there's no rule that says a dog can't play baseball, or that you can't use open source to do financial crime, I guess we can't sanction people who use it for money laundering!'
  - steezeburger 4y ago
    I would love to see a dog playing baseball.
acdha 4y ago
It might also be as simple as them seeing more cases where someone used a mixer at all that this is now on their radar. It’s actually not easy to create a new mixer because the whole idea is that you need a fair volume of legitimate traffic. If you set one up and nobody uses it, you see no benefit. If only criminals use it, you’ve created a great lead generator for the authorities. If you’re sufficiently conspiratorial in mind, blocking the best known mixer would be a great way to drive traffic to new mixers which they secretly run.
- landemva 4y ago
  > a great way to drive traffic to new mixers which they secretly run. Mixer program code is publicly deployed and is run on-chain by the block validators. How would government secretly run a mixer?
  - gerikson 4y ago
    Easy. They set up a crypto project that looks just like any other crypto project.
  - acdha 4y ago
    1. They setup another project either by forking some existing code or writing their own - statistically nobody in the cryptocurrency world does real-world diligence so you’re talking, what, a web page, a few GitHub profiles and some people talking it up? That’s tiny by the standards of most national police or intelligence budgets. 2. Compromising someone’s project - want to bet someone wouldn’t agree to “accidentally” make a bug in exchange for a shorter sentence? (I’m not saying everyone who works on these are drug dealers or something but I’d bet there are a lot of cases for tax evasion threats given the ideology) 3. Mixers are critically dependent on having enough volume to meet demand but using one adds cost and persecution risk so most people don’t use them. If you knew someone like the DPRK was trying to launder a large amount of money, they’d be limited based the number of other participants – especially as news like today’s tells everyone that using a mixer means a non-trivial risk of permanently tainting the tokens you launder. If you started submitting transactions to and from your own wallets, you could make the analysis problem easier by ensuring that most of the participants are secretly known to you.
kinnth 4y ago
Isn't mixing a thing of the past now? Most darknet sites now only use XMR which is inherently privaty focussed. So this banning will help limit the ease of hacked fund mixing, but less about purchasing on darkweb.
- celticninja 4y ago
  Ransomware payments
uncomputation 4y ago
> a lot easier for someone to create a new mixer As in, deploy contract, yes. As in, have enough liquidity to both “mix” (aka launder) money and provide sufficient anonymity, no, that’s a network effect which is largely winner-take-all. The largest mixers will be the safest and most effective but then also the biggest targets. As you go down the list, they get less likely to be sanctioned but more likely to be unsafe/honeypots/ineffective.
lern_too_spel 4y ago
Leaving aside the liquidity problem with that statement, it's also a lot easier to insider trade than for the feds to investigate it. That's why the penalty is so high. Eventually, they'll just KYC the whole chain to your wallet because it's much cheaper to do. If you can't prove that your chaincoins are clean, you can't convert them to usable money.
mgraczyk 4y ago
There's a bit more to the analysis that you have to consider. Two points 1. The amount of money you can mix depends on the scale of the mixing operation 2. It's easy to build something that looks like a mixer but at some point steals the deposited money. The feds don't have to prevent all mixers from operating. They just have to kill the biggest, most trusted players.
shapefrog 4y ago
> it's a lot easier for someone to create a new mixer Sure thing. Send me your money and I will absolutely 100% for sure send back the same amount but anonymized.
sangnoir 4y ago
Alternative reading: investigative authorities don't want you using this mixer, and encourage the use others for...reasons.
TrapLord_Rhodo 4y ago
It's an open source contract... Why would you need to create a new mixer?
bergenty 4y ago
Seems really easy to get a computer to copy the binary (source) and set up unlimited copies though.

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 ago
IIUC, 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 ago
    It'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
  Running your own is pointless, unless a bunch of other people also use it.
anotherrandom 4y ago
TornadoCash is a smart contract, so there is not really a way to enforce the sanction. Plus, there is not really a way to tell who creates a smart contract if you cover your tracks well enough. This sanctions stuff is smoke and mirrors for the government to try and convince themselves they are capable of doing something. The most realistic approach is for major chains to go POS and the major validators and other important pieces of the puzzle to need a lot of resources to the point where they become businesses and are on the governments radar (and by extension they would need to comply with regulations). But because everyone knows that is a natural consequence of POS, it is exactly why no reasonable person would be on board with a transition to it.
- landemva 4y ago
  What are your thoughts about Liquid on BTC? https://blockstream.com/liquid https://blockstream.com/liquid
- nootropicat 4y ago
  >other important pieces of the puzzle to need a lot of resources to the point where they become businesses and are on the governments radar (and by extension they would need to comply with regulations). >But because everyone knows that is a natural consequence of POS, it is exactly why no reasonable person would be on board with a transition to it. You described mining - public companies operating big industrial warehouses with miners. PoS is the opposite - it needs next to zero physical resources. No reasonable person can support PoW unless they support totalitarianism. There's no way to make PoW resistant to government interference.

toomuchtodo 4y ago

It’s all fun and games until you can’t transit the airspace or soil of the US or one of their allies. Sanctions need not have immediate effect, only eventual consistency. https://xkcd.com/538/ https://xkcd.com/538/

nojito 4y ago

How so? We already know that the US has technology to track mixed transactions.

janandonly 4y ago
Laura Shin’s recent book about the old Ethereum DAO hack claims that by means of some kind of chain analysis the feds were able to point to a guilty person. But no details have been published on the mechanics of this “de-mixing”. Possible it has to do with sloppy change address reuse in Wasabi?
- nojito 4y ago
  Most of the information in crypto cases is highly redacted to keep the methods and means of how they track transactions secret.

yunohn 4y ago

> a lot easier for someone to create a new mixer No, it’s really not. Mixers need liquidity, which means they need popularity and volume. That’s not overnight.

WJW 4y ago

> it's a lot easier for someone to create a new mixer A secondary effect of sanctions is indicating what the regulators do and do not consider illegal. Up until now, it was at least marginally possible to state "But I didn't know it was illegal. TornadoCash was doing the exact same thing for years and never got into trouble". After this ruling, that excuse no longer applies and that might dissuade a lot of people who might otherwise be tempted to run a mixer of their own. Also, reputation counts for a lot when it comes to mixers. A mixer that has existed for years is probably legit, a mixer that started up yesterday is a lot more likely to be a rugpull. Even if it will come down to whack-a-mole with the Treasury sanctioning new mixers as they pop up, it might be very difficult for any individual mixer to build up enough reputation to attract significant business.

deleted 4y ago
[deleted]
vl 4y ago
TC mixer is different though, it’s smart contract/zero proof based. Once it’s deployed, it just continues to work. Owners can’t steal funds. If you believe that smart contract is implemented correctly, you can continue to use it. TC utility is diminished by other fact - TC is blocked on exchange level, exchanges do not accept funds coming from TC smart contract.
- bergenty 4y ago
  On a tangent, are smart contracts automatically “open source” - as in anyone can see the source or is there a way to obfuscate what’s on the blockchain?
  - soco 4y ago
    I thought one of the selling points was that everybody can check the contract...
    - saurik 4y ago

daoist_shaman 4y ago

I can only imagine what a round table discussion with the Joint Chiefs of Staff sounds like. "Sir, the hacker groups seem to love this thing we've only recently identified as 'FOSS.' It's surfacing to be an existential threat to our CONOPs. I'm requesting your approval to authorize immediate sanctions against the FOSS threat."

_fat_santa 4y ago
Richard Stallman appears on horseback. Charging into battle to open the source to his favorite printer drivers.
vkou 4y ago
Would you prefer it to be: 'Oh, shucks, there's no rule that says a dog can't play baseball, or that you can't use open source to do financial crime, I guess we can't sanction people who use it for money laundering!'
- steezeburger 4y ago
  I would love to see a dog playing baseball.

acdha 4y ago

It might also be as simple as them seeing more cases where someone used a mixer at all that this is now on their radar. It’s actually not easy to create a new mixer because the whole idea is that you need a fair volume of legitimate traffic. If you set one up and nobody uses it, you see no benefit. If only criminals use it, you’ve created a great lead generator for the authorities. If you’re sufficiently conspiratorial in mind, blocking the best known mixer would be a great way to drive traffic to new mixers which they secretly run.

landemva 4y ago
> a great way to drive traffic to new mixers which they secretly run. Mixer program code is publicly deployed and is run on-chain by the block validators. How would government secretly run a mixer?
- gerikson 4y ago
  Easy. They set up a crypto project that looks just like any other crypto project.
- acdha 4y ago
  1. They setup another project either by forking some existing code or writing their own - statistically nobody in the cryptocurrency world does real-world diligence so you’re talking, what, a web page, a few GitHub profiles and some people talking it up? That’s tiny by the standards of most national police or intelligence budgets. 2. Compromising someone’s project - want to bet someone wouldn’t agree to “accidentally” make a bug in exchange for a shorter sentence? (I’m not saying everyone who works on these are drug dealers or something but I’d bet there are a lot of cases for tax evasion threats given the ideology) 3. Mixers are critically dependent on having enough volume to meet demand but using one adds cost and persecution risk so most people don’t use them. If you knew someone like the DPRK was trying to launder a large amount of money, they’d be limited based the number of other participants – especially as news like today’s tells everyone that using a mixer means a non-trivial risk of permanently tainting the tokens you launder. If you started submitting transactions to and from your own wallets, you could make the analysis problem easier by ensuring that most of the participants are secretly known to you.

kinnth 4y ago

Isn't mixing a thing of the past now? Most darknet sites now only use XMR which is inherently privaty focussed. So this banning will help limit the ease of hacked fund mixing, but less about purchasing on darkweb.

celticninja 4y ago
Ransomware payments

uncomputation 4y ago

> a lot easier for someone to create a new mixer As in, deploy contract, yes. As in, have enough liquidity to both “mix” (aka launder) money and provide sufficient anonymity, no, that’s a network effect which is largely winner-take-all. The largest mixers will be the safest and most effective but then also the biggest targets. As you go down the list, they get less likely to be sanctioned but more likely to be unsafe/honeypots/ineffective.

lern_too_spel 4y ago

Leaving aside the liquidity problem with that statement, it's also a lot easier to insider trade than for the feds to investigate it. That's why the penalty is so high. Eventually, they'll just KYC the whole chain to your wallet because it's much cheaper to do. If you can't prove that your chaincoins are clean, you can't convert them to usable money.

mgraczyk 4y ago

There's a bit more to the analysis that you have to consider. Two points 1. The amount of money you can mix depends on the scale of the mixing operation 2. It's easy to build something that looks like a mixer but at some point steals the deposited money. The feds don't have to prevent all mixers from operating. They just have to kill the biggest, most trusted players.

shapefrog 4y ago

> it's a lot easier for someone to create a new mixer Sure thing. Send me your money and I will absolutely 100% for sure send back the same amount but anonymized.

sangnoir 4y ago

Alternative reading: investigative authorities don't want you using this mixer, and encourage the use others for...reasons.

TrapLord_Rhodo 4y ago

It's an open source contract... Why would you need to create a new mixer?

bergenty 4y ago

Seems really easy to get a computer to copy the binary (source) and set up unlimited copies though.