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I'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 clon

by iameli 4y ago

I'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 ago
  Using it to actually launder money would be illegal, sure. What crime am I committing by deploying the contract?
- MacsHeadroom 4y ago
  Private 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.)
TrapLord_Rhodo 4y ago
It shows their hand. Instead of the sweeping regulation required, they are going to sanction it and pretend like they've fixed the problem. All they've done is Sanction 'A tool'. Why would sanctioned entities care if they used a sanctioned tool? it honestly makes no sense to me.
ETH_start 4y ago
>>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. I've long said that cryptocurrency will force people to decide whether they want a world where we have internet freedoms like free speech and access to strong encryption, or we want to be able to tax income and regulate finance. By turning finance into published information, cryptocurrency reveals the authoritarian core of modern left wing political ideology. The idea that those on the left are liberal will be exposed as hollow by cryptocurrency.
- drewrv 4y ago
  So far, the only thing "cryptocurrency" has revealed is that finance regulations are mostly useful and good.
  - ETH_start 4y ago
    I can cite many examples of how cryptocurrency reveals the pervasive harm done by the centralization of finance (financial regulations). In any case, unless you ban public access to strong encryption, people will use cryptocurrency with increasing frequency. A set of permissionless tools offers the potential for lower friction in finance and payments than tools permissioned by a centralized entity. The question cryptocurrency forces you to answer is: how far are you willing to take centralization? You can no longer leave free speech and encryption communication alone, while centralizing finance under regulatory authorities.
    - likeafox 4y ago
      >people will use cryptocurrency with increasing frequency. For what? "Value storage" and grey/black market purchases and laundering? Because the dream of crypto being used as money for real everyday transactions looks more and more preposterous with each passing day.
      - ETH_start 4y ago
        >>For what? "Value storage" and grey/black market purchases and laundering? For everything: International remittance: no need to go the bank. Just send the USDC/DAI/RAI from my hardware wallet. Community treasuries: if me and a few other people in an online community want to create a jointly controlled fund, we can easily do that by creating a DAO, complete with a multisignature wallet. This doesn't require us to live in the same country, to register a corporation or a corporate controlled bank account, or reveal our real identities to each other. It makes casual financial collaboration orders of magnitude easier. Registration-free electronic cash payments. If I have a MetaMask browser wallet, and layer 2s finally solve the problem of extremely constrained Ethereum scalability, I'll be able to visit a website and when I encounter a paywall, I'll be able to pay $0.01 to read the article, instead of having to choose between buying a subscription or simply not reading the article (more likely). This is the kind of casual transaction between parties without an existing relationship that becomes far more practical with a well-developed cryptocurrency sector. Cryptocurrency becomes better than traditional finance for a significant fraction of payment applications if when scalability and privacy is solved. Relevant: https://news.ycombinator.com/item?id=31797395 https://news.ycombinator.com/item?id=31797395
salawat 4y ago
>I could clone Tornado.Cash's contract code in half an hour; would my new deployment also be sanctioned? You'll find yourself on the business end of a "constructive possession" or "readily convertible" style regulatory situation, the only variable is how long it takes until cases are frequent enough for the Feds to look your way. If you're American, you could run into trouble for operating an unlicensed money transmitter, accessible by individuals on the OFAC list, which as soon as OFAC became aware of going on, gets you on the list til you can prove you have process in place to not do that. Hell, they'll probably crank out a static analysis tool for smart contracts matching and or similar to what they've sanctioned, do some digging on the hits to determine if it is structurally equivalent, then on the list it goes. We're talking OFAC here. The executive is tasked with full discretion to regulate how foreign entities interact with money transmitters operating under the jurisdiction of the United States. They don't have to prove squat. You have to prove to them you are legit.
- iameli 4y ago
  How am I _operating_ it? I deployed a smart contract and walked away. If I don't leave myself a backdoor, there's literally nothing I can do to prevent anyone in the world from interacting with the contract. Everyone that runs an Ethereum full node; they're the ones operating the laundering service. They run servers that store all the transaction records on their hard drives and do the processing of the ZK proofs allowing funds to be redeemed. Those are the people you have to stop if you want the service to go away. In this scenario, I as the contract deployer can do nothing whatsoever to stop them.

by iameli 4y ago

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 ago
Using it to actually launder money would be illegal, sure. What crime am I committing by deploying the contract?
MacsHeadroom 4y ago
Private 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.)

TrapLord_Rhodo 4y ago

It shows their hand. Instead of the sweeping regulation required, they are going to sanction it and pretend like they've fixed the problem. All they've done is Sanction 'A tool'. Why would sanctioned entities care if they used a sanctioned tool? it honestly makes no sense to me.

ETH_start 4y ago

>>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. I've long said that cryptocurrency will force people to decide whether they want a world where we have internet freedoms like free speech and access to strong encryption, or we want to be able to tax income and regulate finance. By turning finance into published information, cryptocurrency reveals the authoritarian core of modern left wing political ideology. The idea that those on the left are liberal will be exposed as hollow by cryptocurrency.

drewrv 4y ago
So far, the only thing "cryptocurrency" has revealed is that finance regulations are mostly useful and good.
- ETH_start 4y ago
  I can cite many examples of how cryptocurrency reveals the pervasive harm done by the centralization of finance (financial regulations). In any case, unless you ban public access to strong encryption, people will use cryptocurrency with increasing frequency. A set of permissionless tools offers the potential for lower friction in finance and payments than tools permissioned by a centralized entity. The question cryptocurrency forces you to answer is: how far are you willing to take centralization? You can no longer leave free speech and encryption communication alone, while centralizing finance under regulatory authorities.
  - likeafox 4y ago
    >people will use cryptocurrency with increasing frequency. For what? "Value storage" and grey/black market purchases and laundering? Because the dream of crypto being used as money for real everyday transactions looks more and more preposterous with each passing day.
    - ETH_start 4y ago
      >>For what? "Value storage" and grey/black market purchases and laundering? For everything: International remittance: no need to go the bank. Just send the USDC/DAI/RAI from my hardware wallet. Community treasuries: if me and a few other people in an online community want to create a jointly controlled fund, we can easily do that by creating a DAO, complete with a multisignature wallet. This doesn't require us to live in the same country, to register a corporation or a corporate controlled bank account, or reveal our real identities to each other. It makes casual financial collaboration orders of magnitude easier. Registration-free electronic cash payments. If I have a MetaMask browser wallet, and layer 2s finally solve the problem of extremely constrained Ethereum scalability, I'll be able to visit a website and when I encounter a paywall, I'll be able to pay $0.01 to read the article, instead of having to choose between buying a subscription or simply not reading the article (more likely). This is the kind of casual transaction between parties without an existing relationship that becomes far more practical with a well-developed cryptocurrency sector. Cryptocurrency becomes better than traditional finance for a significant fraction of payment applications if when scalability and privacy is solved. Relevant: https://news.ycombinator.com/item?id=31797395 https://news.ycombinator.com/item?id=31797395

salawat 4y ago

>I could clone Tornado.Cash's contract code in half an hour; would my new deployment also be sanctioned? You'll find yourself on the business end of a "constructive possession" or "readily convertible" style regulatory situation, the only variable is how long it takes until cases are frequent enough for the Feds to look your way. If you're American, you could run into trouble for operating an unlicensed money transmitter, accessible by individuals on the OFAC list, which as soon as OFAC became aware of going on, gets you on the list til you can prove you have process in place to not do that. Hell, they'll probably crank out a static analysis tool for smart contracts matching and or similar to what they've sanctioned, do some digging on the hits to determine if it is structurally equivalent, then on the list it goes. We're talking OFAC here. The executive is tasked with full discretion to regulate how foreign entities interact with money transmitters operating under the jurisdiction of the United States. They don't have to prove squat. You have to prove to them you are legit.

iameli 4y ago
How am I _operating_ it? I deployed a smart contract and walked away. If I don't leave myself a backdoor, there's literally nothing I can do to prevent anyone in the world from interacting with the contract. Everyone that runs an Ethereum full node; they're the ones operating the laundering service. They run servers that store all the transaction records on their hard drives and do the processing of the ZK proofs allowing funds to be redeemed. Those are the people you have to stop if you want the service to go away. In this scenario, I as the contract deployer can do nothing whatsoever to stop them.