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Dusting “Attack” via Tornado Cash to Public Wallets

183 points by martialg 4y ago

zionic 4y ago
This outcome was as obvious as it was inevitable. There is no mechanism in crypto to reject incoming funds, and all the top addresses are public. Anyone could easily send the top 100,000 wallets “tainted” crypto.
- blurbleblurble 4y ago
  The fact that none of the popular crypto projects have this mechanism just goes to show that nobody was thinking all that deep about the human level of it.
  - encryptluks2 4y ago
    Several crypto projects were in their own right political statements about taking back control and decentralizing institutions. I'm sure there are government-approved enterprise crypto projects out there that are happy for you to use their services, but a lot of developers especially those that work on things for free are more interested in the mindset of who cares if someone sends me free money. You don't see the GNU or similar licenses putting in restrictions for sanctions for a reason.
    - blurbleblurble 4y ago
      I don't think we're talking about the same thing... > Several crypto projects were in their own right political statements about taking back control and decentralizing institutions If these projects are about taking back control, why shouldn't I as a user have the agency to only accept transactions I approve? What if someone dusts you NFTs with abusive imagery on IPFS linked to them? Or spam/scam tokens with funny smart contracts that trick you into doing something you don't want to do when you visit their project page? It ought to have been an obvious feature from the beginning. Spam and public addresses have gone together since forever.
  - segfaultbuserr 4y ago
    The very existence of a clear transaction history on the blockchain is the root of all problems. If everything is natively encrypted by zero-knowledge proofs or ring signatures, none of the issues - privacy and chain analysis, the possibility of tainting a coin, the appearance of centralized coin-mixing services with questionable security, and the numerous aftermarket privacy tokens and coin-join protocols - would exist. The idea of a privacy-preserving digital cash has been proposed since the 1980s, unfortunately this property is not found in many major cryptocurrencies.
    - encryptluks2 4y ago
      Monero is definitely a better option for anonymity, but most crypto users these days just use centralized exchanges. I doubt the government will take kindly on people cashing out any anonymous currency regardless of your legitimate purposes.
      - dannyw 4y ago
        So cash is illegal?
        encryptluks2 4y ago
        As long as the government can print as much as they want then no. Cash is only partly anonymous but is still a safer bet than a lot of crypto if you are trying to achieve reasonable anonymity.
        segfaultbuserr 4y ago
        > Cash is only partly anonymous but is still a safer bet than a lot of crypto I strongly agree. If I have a choice between paying in cash or in a cryptocurrency, I would choose cash nearly every time (with a few exceptions).
    - kube-system 4y ago
      If there was a coin in which it wasn't observable whether you were interacting with a sanctioned entity, it wouldn't make it any more legal to do so. If it shared the same issue of allowing unsolicited transactions, the same problem would exist. Even if said coin existed, it wouldn't guarantee privacy, because information about transactions can be recorded or observed off-chain, and that information can be compromised.
  - drexlspivey 4y ago
    Bank accounts don’t have this mechanism as well, what does this show?
    - qabqabaca 4y ago
      My neo-bank (Revolut) has this feature. If someone sends me money for the first time, or isn't in my contacts, they have to explicitly accept it from their app before it actually lands in their account. Ignoring that specific feature, if you did get money sent to your traditional bank account, you can always contact your bank and tell them you don't know what it is to avoid any trouble. This is not possible with Ethereum.
    - kube-system 4y ago
      Banks reject all transactions from sanctioned entities.
    - colinmhayes 4y ago
      Banks don’t just allow you to reject transfers from sanctioned entities. They force you to.
- aluminaient 4y ago
  Grin [1] requires interactivity between both parties to transact. 1. Https://grin.mw
  - tromp 4y ago
    This is a consequence of Grin implementing the so-called Mimblewimble protocol. Quoting from [1], > In Mimblewimble, outputs are Pedersen commitments r*G+v*H which combine value and blinding factor into a single curve point. The blinding factor serves both to hide the value and to control ownership. Correspondingly, a single (multi-)signature serves both to prove value balance (non-inflation) and to authorize transfer of ownership. [1] https://np.reddit.com/r/CryptoTechnology/comments/kyhgcv/are_there_any_public_cryptocurrencyblockchain https://np.reddit.com/r/CryptoTechnology/comments/kyhgcv/are...
- nerdawson 4y ago
  > There is no mechanism in crypto to reject incoming funds Couldn't the same be said of a regular bank account? This doesn't seem to be unique to crypto. Targeting the most prominent wallets may garner a bit more attention but the end result seems the same. A large number of individuals can have tainted funds deposited in their accounts creating a logistical nightmare.
  - jo6gwb 4y ago
    Your bank has the ability to reject the funds (and some banks will allow you to broadly control deposits with a credit block). Before posting funds to your account, a bank will scan the funds transfer against sanctions lists and only allow the deposit if there is no hit.
    - nerdawson 4y ago
      You don’t think someone on a sanctions list attempting to transfer funds to an account holder is going to cause them a problem, regardless of whether it’s blocked?
- pontifier 4y ago
  It's even funnier when you can create a token with any name you want and send it out... And it's hilarious when they have to pay you to get rid of it.
  - dylkil 4y ago
    Ethereum accounts don't own tokens in the same way they own ETH. Token balances exist with smart contracts, so when someone sends you booby coin all they are doing is updating the storage in a smart contract that 0x123 owns 1bil booby coin. Indexers like etherscan parse all transaction events and just keep a tally of what smart contracts have your address listed in balances. By paying to get rid of it all you are doing is paying for etherscan to update its backend that your address is no longer listed in that smart contract. The real solution is to have wallet software that only tracks tokens you care about.
    - pontifier 4y ago
      The chain I did it on allowed me to set a levy that would go to my account every time the token was moved. I hate that stupid coin.
gerikson 4y ago
What's the context? "Poisoning the well" by associating these addresses with Tornado.cash?
londons_explore 4y ago
I believe this hyperlink might have a sanctioned address in it, and therefore puts HN and readers at risk of violating US sanctions, or creating reporting requirements, if distributed... Sanctions list excerpt: https://home.treasury.gov/policy-issues/financial-sanctions/recent-actions/20220808 https://home.treasury.gov/policy-issues/financial-sanctions/...
- deleted 4y ago
  [deleted]
mmastrac 4y ago
Judges don't run code, so a dusting attack isn't going to magically obfuscate anything. The blockchain record is public and it's clear "to a reasonable person" that this is just a smokescreen. That's really what's missing from web3: the concept of what a reasonable person [1] would believe - not a code-based contract. [1] https://www.courthouselibrary.ca/how-we-can-help/our-legal-knowledge-base/reasonable-person-reasonable-man https://www.courthouselibrary.ca/how-we-can-help/our-legal-k...
- seibelj 4y ago
  It will result in merely detecting the presence of Tornado activity to be unenforceable, which will then result in "smart" detection (an algorithm for which is up for debate), which will be cat and mouse forever. The law as written doesn't have this reasonable person standard yet. I really think the OFAC regime made a mistake here. They overplayed their hands and this will result in a bunch of debate and court activity, which may reduce their power in the end. I would have started mass-blacklisting frequent users of Tornado rather than the contracts themselves, and certainly not by-default made Americans criminals who receive Tornado funds. That is clearly unenforceable and will put a magnifying glass on this issue.
  - rblatz 4y ago
    You act like Ethereum is some sort of force of nature and the OFAC needs to play by the rules of Ethereum instead of the other way around. If Ethereum as a whole is designed in a way that makes it impossible to enforce current laws, it's more likely that Ethereum will need to adapt to the laws, or eth will be made illegal and anyone caught dealing in eth will be considered to have broken the law.
    - seibelj 4y ago
      It’s possible a government agency will go rogue and try to wipe out the savings and industry of millions of Americans. Seems unlikely to me.
    - nisegami 4y ago
mathieubordere 4y ago
Can someone explain this in English please?
- shakezula 4y ago
  You can send a ton of really small transactions (colloquially referred to as "crypto dust") for an insignificant amount of money to innocent wallets from a single tainted wallet. The "tainted wallet" in this case would be one tied to Tornado Cash. The Treasury, having sanctioned TornadoCash, now considers the targeted wallet as having done business with a sanctioned entity.
  - daneel_w 4y ago
    Does it make any legal difference that 0.1 ETH is actually $150 instead of an insignificant amount of money?
    - dereg 4y ago
      This is currently uncharted territory. Currently, you can get banned by exchanges if your account has any interaction with mixers like tornado. There's no precedent in regards to how the government views accounts tainted by attacks like this.
      - cascada 4y ago
        >if your account What is "your account"? There's no "first-last name, date of birth, ID number" attached to an ethereum account unless an account is on a centralized exchange. Generating a new account is a matter of 2 seconds.
- RIMR 4y ago
  From what I can understand, and I'm probably off-base a little: Government: "We are sanctioning these known criminal wallets." Tornado Cash: "Anyone receiving deposits from these criminal wallets will be blacklisted." Criminals: deposit a small amount of crypto into every wallet they can find associated with Tornado Cash, blacklisting all of them
seibelj 4y ago
Why this will cause chaos is that Chainalysis and similar tools for sanctions screening are all / nothing - if the rule was that "anyone who has touched Tornado assets should be banned", then sending small amounts to everyone means that the industry has to ban everyone. The point is to show the difficulty of using such a blunt tool. By the letter of the law, everyone based in the US is a criminal if they receive Tornado funds, and legally must contact the OFAC office.
- deleted 4y ago
  [deleted]
- salawat 4y ago
  You aren't a criminal until a prosecutor presses criminal charges, and you are convicted by a jury of your peers. Yes, in the end you will have to talk to OFAC, and work with them to sort things out. Nothing says it can't all be cleaned up by sending to a burn address because you had funds pushed.
  - seibelj 4y ago
    I’m sure the OFAC government office is setup for mass handling of small amounts of money requests from a widespread group of normal people
    - salawat 4y ago
      Actually, the specific architecture delegates responsibility out to regulated service providers who then set up their infrastructure accordingly. If there are no OFAC compliant service providers in the space, then hoo, boy, are those SP's in for a world of hurt. Worst case scenario, expect allocation of budget to flesh out requisite infrastrure Congress-soonish, or an RFP for a Call Center/software development contract. There is a blueprint/SOP for this sort of business, believe it or not. It has been built before. Alarmingly, the "becoming exceedingly efficient at it" never seems to materialize though.
  - yieldcrv 4y ago
    ha, more like until Coinbase and all the exchanges and your bank decides to treat you like a criminal
Hnus 4y ago
Can somebody more knowledgeable confirm if all your coins will become forever tainted if you are "dusted" like this? As there is no way how to break ever break the paper trail using just bitcoin is only way how to make your coins clean going to monero and back again or something like that? Are techniques determining if your coins are tainted or not on exchanges where they could be refused or confiscated sophisticated enough to not flag you in cases like these? Even if its possible I imagine its computationally expensive.
- dereg 4y ago
  Yes. Ethereum does not have coin control[1] which means that your entire ETH balance is inextricably commingled in a dusting attack, whether you like it or not. That's different from Bitcoin, on which you can choose to not spend tainted coin in your wallet (and prove the provenance of your funds). [1]: https://bitcoin.design/guide/how-it-works/coin-selection/ https://bitcoin.design/guide/how-it-works/coin-selection/
- waynenilsen 4y ago
  It is actually worse than you think, the entire account ends up having "interacted" with a "sanctioned" entity :( account owners may be subject 10y in jail if any prosecutor would bring a case. This is true for any tokens and NFTs associated with the account as well as the ETH.
- salawat 4y ago
  Regulators aren't stupid. There will be a hotline or process for reporting your having been dusted. You call, let them know, they confirm, they give you special dispensation to move the tainted funds to a burn address most likely. They don't care the ultimate location in which the funds get locked down, only that they do. That Ethereum allows for disting won't hamper things the least bit. However a lot of customer service is probably going to have to be accommodated, so if you do get dusted, I sure hope that wasn't your only financial lifeline, because it may take a while to work through.
  - Hnus 4y ago
    Hotline you describe seems like pure speculation I find unlikely but I have no idea how the law works but few questions naturally come to mind. Customer of which service? Provided by who? Agreed upon using what contract? Also having to burn your entire pile of cash because of one spec of dust is really funny.
ArtTimeInvestor 4y ago
Ethereum is very different in this regard than Bitcoin. Ethereum has accounts. So when Ana sends coins to Berta, Berta has no way to leave those coins untouched. As they just raise the amount of coins she owns. So next time Berta sends coins to Charles, it is unclear which coins she sent and if those include Ana's coins. Bitcoin on the other hand has no accounts. When Ana sends coins to Berta, she just marks those coins as "Can be spent by Berta in the future". Berta can decide to never touch them. When Berta sends coins to Charles, she decides which of her coins she sends. It is even more complex, as the conditions how the Bitcoins can be spent are defined by little scripts. Even though those scripts are (for now) more restricted than on Ethereum. So it is not really true that Bitcoins are "on address 17f8..". In reality that means the Bitcoins are locked by a script that demands any transactions must be signed by the secret key that matches public key 17f8... So in a sense, Bitcoin does not have addresses. It has scripts. I wonder how Blockchain explorers deal with more complex scripts. For example on blockchain.com one can look up coins by putting an "address" into the search bar. But how would one look up coins that are not locked by a script that puts the coins under control of a certain key? Or a script that puts them under control of multiple keys?
- deleted 4y ago
  [deleted]
- heeton 4y ago
  Do you have a source for this? Last I checked, the ledger on Bitcoin and Ethereum are functionally identical. A value against a wallet address. There are no "accounts" on either.
  - freeAgent 4y ago
    Bitcoin and similar chains use a “UTXO” model that tracks outputs of individual transactions, even when made to the same receiving address. This allows for control of specific coins when spending. ETH doesn’t use UTXO and I don’t believe it has the ability to perform coin control.
  - dereg 4y ago
    It's called "coin control". On Ethereum, your entire account balance is inextricably commingled. On Bitcoin, you can maintain the provenance of your coins. https://bitcoin.design/guide/how-it-works/coin-selection/ https://bitcoin.design/guide/how-it-works/coin-selection/
abxytg 4y ago
One of the most interesting implications of this is that it is a slight vindication of the bitcoin maximalist "bitcoin fixes this" mantra. If a government can't exercise control over your unit of account, it doesn't matter what they sanction. Of course the "bitcoin" that "fixes this" isn't the one we have in reality -- you can't use it widely and cheaply to transact and it's so volatile as to be useless as the unit of account for anyone with more than a few thousand $ nw.
- beaned 4y ago
  On the "cheap to transact" side, lightning wallets let you send for typically less than a penny, and without waiting for block confirmation.
  - colinmhayes 4y ago
    Lightning isn’t decentralized though. They just reinvented PayPal.
    - tossl568 4y ago
      That's completely untrue.
    - imtringued 4y ago
      It is federated PayPal.
      - tossl568 4y ago
        No it is not. It's a P2P payment network.
  - swalsh 4y ago
    Avalanche lets you natively bridge bitcoin to their network, and it lets you transact fairly cheaply (think my last transaction was $.15) and their consensus algorithm can reach finality pretty quickly. Typically around 2 seconds. But it also has smart contract support.
game-of-throws 4y ago
0.1 ETH per address? That's $168 at current prices. Someone is spending a lot of money to prove a point. Where do I sign up to get some of this "dust"?
- tossl568 4y ago
  You need your own late night talk show by the looks of it.
- swalsh 4y ago
  I guess if you have a million dollars of cash you can't move out because it's in a flagged entity, why not send it to everyone and prove a point?
- woodruffw 4y ago
  You can always email the State Department and cut out the middleman entirely.
- hrdwdmrbl 4y ago
  I think the attacker is depositing 0.1 ETH each time but the recipients are receiving less
  - hrdwdmrbl 4y ago
    I believe I was wrong about this. The recipients do seem to have received 0.1 ETH
Tepix 4y ago
Related: How many tornado cash forks have been deployed and how long will it take to blacklist them?
- zionic 4y ago
  This is the real question. Anyone can fork tornado cash in an afternoon.
  - madars 4y ago
    You can fork the contract but you can't fork the anonymity set. Tornado Cash had 12k different depositors https://dune.com/poma/tornado-cash_1 https://dune.com/poma/tornado-cash_1 . If you have 100 clones with 120 users each (maximally decentralized deployment!) the anonymity you get is way worse.
  - colinmhayes 4y ago
    Mixers only work with liquidity. Just forking it doesn’t accomplish anything, you have to get people to use it. That’s tough when no one is using it.
- dannyw 4y ago
  Why fork? Tornadocash.eth.link is still up. Its IPFS will also be up for probably forever.
  - Tepix 4y ago
    Fork so your money isn't tainted.
- dylkil 4y ago
  They never included the official tornado cash contracts deployed on the arbitrum layer 2, so its still legal to use that one.
rufusroflpunch 4y ago
This will be a great test of how decentralized the ethereum ecosystem actually is.
- swalsh 4y ago
  Decentralization is not a singular thing, different aspects of crypto are decentralized others are known to not be. Everyone knows BTC is decentralized, but WBTC is not, but BTC.b probably is. Virtually anything dealing with real-world resources will eventually involve trust and centralization. The US Government has a monopoly on regulating dollars, and if you want to touch dollars legally, you're going to have to comply with their regulations. But having a relationship with a centralized power authority does not negate the entire thing. Framing this in the context of centralized vs decentralized is wrong. This discussion is more like a discussion of foreign policy. You can think of blockchains as independent sovereignties. They are purely digital economies with a type of digital natural capital, human capital etc, it also has imports, and exports. To import dollars there must exist a relationship with the US Government, and framing this as a negotiation is more practical than framing it as a technical discussion. We're talking about governece here. Tech is irrelevent. At the end of the day, if crypto wants a better footing, it would benefit from self-regulating itself a bit to gain increased favor with it's foreign trade partners. It would also benefit from increasing it's exports to gain leverage, the trade imbalance that exists today is not doing it any favors.
  - rufusroflpunch 4y ago
    I agree, that's why I specified the ethereum ecosystem, not just the protocol. For instance, Infura and MetaMask have already blacklisted the OFAC addresses, and those services are critical to the workflows of MANY services in the ecosystem.
    - nootropicat 4y ago
      Metamask didn't blacklist these addresses. https://github.com/MetaMask/metamask-extension/commits/develop https://github.com/MetaMask/metamask-extension/commits/devel...
jcpham2 4y ago
Back in the merged mining days of bitcoin/namecoin, there was a lot of worthless namecoin around and you didn't exactly know what to do with it: So I had the bright idea to go around collecting publicly listed namecoin addresses - bitcointalk signatures, github donation addresses, developers, you name it I think I gathered about 100 addresses I wrote a bash script and put looped namedcoind to read my text file and send the minimum tx amount to a random address every second.... So that was running in a (detached) screen and I got busy and forgot about... for a few days... Some folks didn't think that was very funny and called it an "attack"
- bhelkey 4y ago
  So you sent less than a penny to github donation addresses ~35 times an hour every hour for days on end? And you were surprised when folks didn't enjoy this spam?
  - jcpham2 4y ago
    Some might say that the original hacker ethos is exploring exploiting and even attempting to break things. I’m retrospect yes it was juvenile and regrettable but hey welcome to the game, friends. People weren’t brigading you with pitchforks back then because proof of work wasn’t destroying the planet a decade ago. Simpler times.
mgraczyk 4y ago
This has always been my idea for how I would try to extract a large amount of money if I ever managed to hack a big Defi protocol. Distract exchanges and regulators by splitting the stolen proceeds into tons of tiny amounts, send most of it to random famous accounts in small chunks, and have some of it go to my accounts which have been set up ahead of time to look like innocuous whales.
- deleted 4y ago
  [deleted]
- dylkil 4y ago
  with chainanalysis this would never work, eventually you have to pool the coins somewhere or funnel them through an exit, both of which will be obvious with analysis software
  - cobertos 4y ago
    If you're okay with losing a decent percentage and have enough addresses that are "warmed" up with other activity, you could create enough ambiguity, no? Funneling them through the exit seems harder
    - dylkil 4y ago
      patterns will emerge eventually as you try to reconcile more and more of your scattered eth
- colinmhayes 4y ago
  Just mix it into a few different addresses and sell yourself some NFTs.
nicbou 4y ago
A bit of context: https://web3isgoinggreat.com/?id=tornado-cash-added-to-us-sanctions-list https://web3isgoinggreat.com/?id=tornado-cash-added-to-us-sa...
paulpauper 4y ago
It's easy to handle dust transactions. There are many ways of going about it, such as disregarding transactions that have certain parameters. Binance's wallets are not threatened by this.
spaceman_2020 4y ago
Whatever else you might say about it, crypto is never boring.
woah 4y ago
Anti money laundering laws are similar to attempts to ban encryption because "criminals might use it to plan crimes". Instead of focusing on catching criminals doing illegal things using time honored criminal investigation techniques, the government has chosen to curtail everyone's right to privacy and free speech. An analogous situation would be if the US government published a list of IP addresses which were known to have sent encrypted traffic, and declared that anyone receiving packets from these addresses (regardless of whether they wanted to or not), might be prosecuted.
deleted 4y ago
[deleted]
yuan43 4y ago
It looks like this only checks one of the blacklisted addresses. For the full set, see: https://home.treasury.gov/policy-issues/financial-sanctions/recent-actions/20220808 https://home.treasury.gov/policy-issues/financial-sanctions/... Blacklists have been a topic in Bitcoin for ages. The problem with a blacklist is that in principle, identity creation is easy. Tornado team gets just one new address, and it's whack-a-mole time for Treasury. I doubt this will work out the way Treasury thinks it will.
- meltedcapacitor 4y ago
  Isn't the point that legal crypto-fiat gateways will do (some of) the job for them, and ban stuff like that (beyond explicit Treasury bans) voluntarily?
sva_ 4y ago
So this just solidifies/removes any doubt the US's opinion that Tornado is merely used by criminals?
dudeman6969 4y ago
So what? If North Koreans stand outside of the mall and make it rain dolla bills and you pick one up doesn’t mean you are now a criminal. This is dumb as hell

183 points by martialg 4y ago

This outcome was as obvious as it was inevitable. There is no mechanism in crypto to reject incoming funds, and all the top addresses are public. Anyone could easily send the top 100,000 wallets “tainted” crypto.

blurbleblurble 4y ago
The fact that none of the popular crypto projects have this mechanism just goes to show that nobody was thinking all that deep about the human level of it.
- encryptluks2 4y ago
  Several crypto projects were in their own right political statements about taking back control and decentralizing institutions. I'm sure there are government-approved enterprise crypto projects out there that are happy for you to use their services, but a lot of developers especially those that work on things for free are more interested in the mindset of who cares if someone sends me free money. You don't see the GNU or similar licenses putting in restrictions for sanctions for a reason.
  - blurbleblurble 4y ago
    I don't think we're talking about the same thing... > Several crypto projects were in their own right political statements about taking back control and decentralizing institutions If these projects are about taking back control, why shouldn't I as a user have the agency to only accept transactions I approve? What if someone dusts you NFTs with abusive imagery on IPFS linked to them? Or spam/scam tokens with funny smart contracts that trick you into doing something you don't want to do when you visit their project page? It ought to have been an obvious feature from the beginning. Spam and public addresses have gone together since forever.
- segfaultbuserr 4y ago
  The very existence of a clear transaction history on the blockchain is the root of all problems. If everything is natively encrypted by zero-knowledge proofs or ring signatures, none of the issues - privacy and chain analysis, the possibility of tainting a coin, the appearance of centralized coin-mixing services with questionable security, and the numerous aftermarket privacy tokens and coin-join protocols - would exist. The idea of a privacy-preserving digital cash has been proposed since the 1980s, unfortunately this property is not found in many major cryptocurrencies.
  - encryptluks2 4y ago
    Monero is definitely a better option for anonymity, but most crypto users these days just use centralized exchanges. I doubt the government will take kindly on people cashing out any anonymous currency regardless of your legitimate purposes.
    - dannyw 4y ago
      So cash is illegal?
      - encryptluks2 4y ago
        As long as the government can print as much as they want then no. Cash is only partly anonymous but is still a safer bet than a lot of crypto if you are trying to achieve reasonable anonymity.
        segfaultbuserr 4y ago
        > Cash is only partly anonymous but is still a safer bet than a lot of crypto I strongly agree. If I have a choice between paying in cash or in a cryptocurrency, I would choose cash nearly every time (with a few exceptions).
  - kube-system 4y ago
    If there was a coin in which it wasn't observable whether you were interacting with a sanctioned entity, it wouldn't make it any more legal to do so. If it shared the same issue of allowing unsolicited transactions, the same problem would exist. Even if said coin existed, it wouldn't guarantee privacy, because information about transactions can be recorded or observed off-chain, and that information can be compromised.
- drexlspivey 4y ago
  Bank accounts don’t have this mechanism as well, what does this show?
  - qabqabaca 4y ago
    My neo-bank (Revolut) has this feature. If someone sends me money for the first time, or isn't in my contacts, they have to explicitly accept it from their app before it actually lands in their account. Ignoring that specific feature, if you did get money sent to your traditional bank account, you can always contact your bank and tell them you don't know what it is to avoid any trouble. This is not possible with Ethereum.
  - kube-system 4y ago
    Banks reject all transactions from sanctioned entities.
  - colinmhayes 4y ago
    Banks don’t just allow you to reject transfers from sanctioned entities. They force you to.
aluminaient 4y ago
Grin [1] requires interactivity between both parties to transact. 1. Https://grin.mw
- tromp 4y ago
  This is a consequence of Grin implementing the so-called Mimblewimble protocol. Quoting from [1], > In Mimblewimble, outputs are Pedersen commitments r*G+v*H which combine value and blinding factor into a single curve point. The blinding factor serves both to hide the value and to control ownership. Correspondingly, a single (multi-)signature serves both to prove value balance (non-inflation) and to authorize transfer of ownership. [1] https://np.reddit.com/r/CryptoTechnology/comments/kyhgcv/are_there_any_public_cryptocurrencyblockchain https://np.reddit.com/r/CryptoTechnology/comments/kyhgcv/are...
nerdawson 4y ago
> There is no mechanism in crypto to reject incoming funds Couldn't the same be said of a regular bank account? This doesn't seem to be unique to crypto. Targeting the most prominent wallets may garner a bit more attention but the end result seems the same. A large number of individuals can have tainted funds deposited in their accounts creating a logistical nightmare.
- jo6gwb 4y ago
  Your bank has the ability to reject the funds (and some banks will allow you to broadly control deposits with a credit block). Before posting funds to your account, a bank will scan the funds transfer against sanctions lists and only allow the deposit if there is no hit.
  - nerdawson 4y ago
    You don’t think someone on a sanctions list attempting to transfer funds to an account holder is going to cause them a problem, regardless of whether it’s blocked?
pontifier 4y ago
It's even funnier when you can create a token with any name you want and send it out... And it's hilarious when they have to pay you to get rid of it.
- dylkil 4y ago
  Ethereum accounts don't own tokens in the same way they own ETH. Token balances exist with smart contracts, so when someone sends you booby coin all they are doing is updating the storage in a smart contract that 0x123 owns 1bil booby coin. Indexers like etherscan parse all transaction events and just keep a tally of what smart contracts have your address listed in balances. By paying to get rid of it all you are doing is paying for etherscan to update its backend that your address is no longer listed in that smart contract. The real solution is to have wallet software that only tracks tokens you care about.
  - pontifier 4y ago
    The chain I did it on allowed me to set a levy that would go to my account every time the token was moved. I hate that stupid coin.

gerikson 4y ago

What's the context? "Poisoning the well" by associating these addresses with Tornado.cash?

londons_explore 4y ago

I believe this hyperlink might have a sanctioned address in it, and therefore puts HN and readers at risk of violating US sanctions, or creating reporting requirements, if distributed... Sanctions list excerpt: https://home.treasury.gov/policy-issues/financial-sanctions/recent-actions/20220808 https://home.treasury.gov/policy-issues/financial-sanctions/...

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mmastrac 4y ago

Judges don't run code, so a dusting attack isn't going to magically obfuscate anything. The blockchain record is public and it's clear "to a reasonable person" that this is just a smokescreen. That's really what's missing from web3: the concept of what a reasonable person [1] would believe - not a code-based contract. [1] https://www.courthouselibrary.ca/how-we-can-help/our-legal-knowledge-base/reasonable-person-reasonable-man https://www.courthouselibrary.ca/how-we-can-help/our-legal-k...

seibelj 4y ago
It will result in merely detecting the presence of Tornado activity to be unenforceable, which will then result in "smart" detection (an algorithm for which is up for debate), which will be cat and mouse forever. The law as written doesn't have this reasonable person standard yet. I really think the OFAC regime made a mistake here. They overplayed their hands and this will result in a bunch of debate and court activity, which may reduce their power in the end. I would have started mass-blacklisting frequent users of Tornado rather than the contracts themselves, and certainly not by-default made Americans criminals who receive Tornado funds. That is clearly unenforceable and will put a magnifying glass on this issue.
- rblatz 4y ago
  You act like Ethereum is some sort of force of nature and the OFAC needs to play by the rules of Ethereum instead of the other way around. If Ethereum as a whole is designed in a way that makes it impossible to enforce current laws, it's more likely that Ethereum will need to adapt to the laws, or eth will be made illegal and anyone caught dealing in eth will be considered to have broken the law.
  - seibelj 4y ago
    It’s possible a government agency will go rogue and try to wipe out the savings and industry of millions of Americans. Seems unlikely to me.
  - nisegami 4y ago

mathieubordere 4y ago

Can someone explain this in English please?

shakezula 4y ago
You can send a ton of really small transactions (colloquially referred to as "crypto dust") for an insignificant amount of money to innocent wallets from a single tainted wallet. The "tainted wallet" in this case would be one tied to Tornado Cash. The Treasury, having sanctioned TornadoCash, now considers the targeted wallet as having done business with a sanctioned entity.
- daneel_w 4y ago
  Does it make any legal difference that 0.1 ETH is actually $150 instead of an insignificant amount of money?
  - dereg 4y ago
    This is currently uncharted territory. Currently, you can get banned by exchanges if your account has any interaction with mixers like tornado. There's no precedent in regards to how the government views accounts tainted by attacks like this.
    - cascada 4y ago
      >if your account What is "your account"? There's no "first-last name, date of birth, ID number" attached to an ethereum account unless an account is on a centralized exchange. Generating a new account is a matter of 2 seconds.
RIMR 4y ago
From what I can understand, and I'm probably off-base a little: Government: "We are sanctioning these known criminal wallets." Tornado Cash: "Anyone receiving deposits from these criminal wallets will be blacklisted." Criminals: deposit a small amount of crypto into every wallet they can find associated with Tornado Cash, blacklisting all of them

seibelj 4y ago

Why this will cause chaos is that Chainalysis and similar tools for sanctions screening are all / nothing - if the rule was that "anyone who has touched Tornado assets should be banned", then sending small amounts to everyone means that the industry has to ban everyone. The point is to show the difficulty of using such a blunt tool. By the letter of the law, everyone based in the US is a criminal if they receive Tornado funds, and legally must contact the OFAC office.

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salawat 4y ago
You aren't a criminal until a prosecutor presses criminal charges, and you are convicted by a jury of your peers. Yes, in the end you will have to talk to OFAC, and work with them to sort things out. Nothing says it can't all be cleaned up by sending to a burn address because you had funds pushed.
- seibelj 4y ago
  I’m sure the OFAC government office is setup for mass handling of small amounts of money requests from a widespread group of normal people
  - salawat 4y ago
    Actually, the specific architecture delegates responsibility out to regulated service providers who then set up their infrastructure accordingly. If there are no OFAC compliant service providers in the space, then hoo, boy, are those SP's in for a world of hurt. Worst case scenario, expect allocation of budget to flesh out requisite infrastrure Congress-soonish, or an RFP for a Call Center/software development contract. There is a blueprint/SOP for this sort of business, believe it or not. It has been built before. Alarmingly, the "becoming exceedingly efficient at it" never seems to materialize though.
- yieldcrv 4y ago
  ha, more like until Coinbase and all the exchanges and your bank decides to treat you like a criminal

Hnus 4y ago

Can somebody more knowledgeable confirm if all your coins will become forever tainted if you are "dusted" like this? As there is no way how to break ever break the paper trail using just bitcoin is only way how to make your coins clean going to monero and back again or something like that? Are techniques determining if your coins are tainted or not on exchanges where they could be refused or confiscated sophisticated enough to not flag you in cases like these? Even if its possible I imagine its computationally expensive.

dereg 4y ago
Yes. Ethereum does not have coin control[1] which means that your entire ETH balance is inextricably commingled in a dusting attack, whether you like it or not. That's different from Bitcoin, on which you can choose to not spend tainted coin in your wallet (and prove the provenance of your funds). [1]: https://bitcoin.design/guide/how-it-works/coin-selection/ https://bitcoin.design/guide/how-it-works/coin-selection/
waynenilsen 4y ago
It is actually worse than you think, the entire account ends up having "interacted" with a "sanctioned" entity :( account owners may be subject 10y in jail if any prosecutor would bring a case. This is true for any tokens and NFTs associated with the account as well as the ETH.
salawat 4y ago
Regulators aren't stupid. There will be a hotline or process for reporting your having been dusted. You call, let them know, they confirm, they give you special dispensation to move the tainted funds to a burn address most likely. They don't care the ultimate location in which the funds get locked down, only that they do. That Ethereum allows for disting won't hamper things the least bit. However a lot of customer service is probably going to have to be accommodated, so if you do get dusted, I sure hope that wasn't your only financial lifeline, because it may take a while to work through.
- Hnus 4y ago
  Hotline you describe seems like pure speculation I find unlikely but I have no idea how the law works but few questions naturally come to mind. Customer of which service? Provided by who? Agreed upon using what contract? Also having to burn your entire pile of cash because of one spec of dust is really funny.

ArtTimeInvestor 4y ago

Ethereum is very different in this regard than Bitcoin. Ethereum has accounts. So when Ana sends coins to Berta, Berta has no way to leave those coins untouched. As they just raise the amount of coins she owns. So next time Berta sends coins to Charles, it is unclear which coins she sent and if those include Ana's coins. Bitcoin on the other hand has no accounts. When Ana sends coins to Berta, she just marks those coins as "Can be spent by Berta in the future". Berta can decide to never touch them. When Berta sends coins to Charles, she decides which of her coins she sends. It is even more complex, as the conditions how the Bitcoins can be spent are defined by little scripts. Even though those scripts are (for now) more restricted than on Ethereum. So it is not really true that Bitcoins are "on address 17f8..". In reality that means the Bitcoins are locked by a script that demands any transactions must be signed by the secret key that matches public key 17f8... So in a sense, Bitcoin does not have addresses. It has scripts. I wonder how Blockchain explorers deal with more complex scripts. For example on blockchain.com one can look up coins by putting an "address" into the search bar. But how would one look up coins that are not locked by a script that puts the coins under control of a certain key? Or a script that puts them under control of multiple keys?

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heeton 4y ago
Do you have a source for this? Last I checked, the ledger on Bitcoin and Ethereum are functionally identical. A value against a wallet address. There are no "accounts" on either.
- freeAgent 4y ago
  Bitcoin and similar chains use a “UTXO” model that tracks outputs of individual transactions, even when made to the same receiving address. This allows for control of specific coins when spending. ETH doesn’t use UTXO and I don’t believe it has the ability to perform coin control.
- dereg 4y ago
  It's called "coin control". On Ethereum, your entire account balance is inextricably commingled. On Bitcoin, you can maintain the provenance of your coins. https://bitcoin.design/guide/how-it-works/coin-selection/ https://bitcoin.design/guide/how-it-works/coin-selection/

abxytg 4y ago

One of the most interesting implications of this is that it is a slight vindication of the bitcoin maximalist "bitcoin fixes this" mantra. If a government can't exercise control over your unit of account, it doesn't matter what they sanction. Of course the "bitcoin" that "fixes this" isn't the one we have in reality -- you can't use it widely and cheaply to transact and it's so volatile as to be useless as the unit of account for anyone with more than a few thousand $ nw.

beaned 4y ago
On the "cheap to transact" side, lightning wallets let you send for typically less than a penny, and without waiting for block confirmation.
- colinmhayes 4y ago
  Lightning isn’t decentralized though. They just reinvented PayPal.
  - tossl568 4y ago
    That's completely untrue.
  - imtringued 4y ago
    It is federated PayPal.
    - tossl568 4y ago
      No it is not. It's a P2P payment network.
- swalsh 4y ago
  Avalanche lets you natively bridge bitcoin to their network, and it lets you transact fairly cheaply (think my last transaction was $.15) and their consensus algorithm can reach finality pretty quickly. Typically around 2 seconds. But it also has smart contract support.

game-of-throws 4y ago

0.1 ETH per address? That's $168 at current prices. Someone is spending a lot of money to prove a point. Where do I sign up to get some of this "dust"?

tossl568 4y ago
You need your own late night talk show by the looks of it.
swalsh 4y ago
I guess if you have a million dollars of cash you can't move out because it's in a flagged entity, why not send it to everyone and prove a point?
woodruffw 4y ago
You can always email the State Department and cut out the middleman entirely.
hrdwdmrbl 4y ago
I think the attacker is depositing 0.1 ETH each time but the recipients are receiving less
- hrdwdmrbl 4y ago
  I believe I was wrong about this. The recipients do seem to have received 0.1 ETH

Tepix 4y ago

Related: How many tornado cash forks have been deployed and how long will it take to blacklist them?

zionic 4y ago
This is the real question. Anyone can fork tornado cash in an afternoon.
- madars 4y ago
  You can fork the contract but you can't fork the anonymity set. Tornado Cash had 12k different depositors https://dune.com/poma/tornado-cash_1 https://dune.com/poma/tornado-cash_1 . If you have 100 clones with 120 users each (maximally decentralized deployment!) the anonymity you get is way worse.
- colinmhayes 4y ago
  Mixers only work with liquidity. Just forking it doesn’t accomplish anything, you have to get people to use it. That’s tough when no one is using it.
dannyw 4y ago
Why fork? Tornadocash.eth.link is still up. Its IPFS will also be up for probably forever.
- Tepix 4y ago
  Fork so your money isn't tainted.
dylkil 4y ago
They never included the official tornado cash contracts deployed on the arbitrum layer 2, so its still legal to use that one.

rufusroflpunch 4y ago

This will be a great test of how decentralized the ethereum ecosystem actually is.

swalsh 4y ago
Decentralization is not a singular thing, different aspects of crypto are decentralized others are known to not be. Everyone knows BTC is decentralized, but WBTC is not, but BTC.b probably is. Virtually anything dealing with real-world resources will eventually involve trust and centralization. The US Government has a monopoly on regulating dollars, and if you want to touch dollars legally, you're going to have to comply with their regulations. But having a relationship with a centralized power authority does not negate the entire thing. Framing this in the context of centralized vs decentralized is wrong. This discussion is more like a discussion of foreign policy. You can think of blockchains as independent sovereignties. They are purely digital economies with a type of digital natural capital, human capital etc, it also has imports, and exports. To import dollars there must exist a relationship with the US Government, and framing this as a negotiation is more practical than framing it as a technical discussion. We're talking about governece here. Tech is irrelevent. At the end of the day, if crypto wants a better footing, it would benefit from self-regulating itself a bit to gain increased favor with it's foreign trade partners. It would also benefit from increasing it's exports to gain leverage, the trade imbalance that exists today is not doing it any favors.
- rufusroflpunch 4y ago
  I agree, that's why I specified the ethereum ecosystem, not just the protocol. For instance, Infura and MetaMask have already blacklisted the OFAC addresses, and those services are critical to the workflows of MANY services in the ecosystem.
  - nootropicat 4y ago
    Metamask didn't blacklist these addresses. https://github.com/MetaMask/metamask-extension/commits/develop https://github.com/MetaMask/metamask-extension/commits/devel...

jcpham2 4y ago

Back in the merged mining days of bitcoin/namecoin, there was a lot of worthless namecoin around and you didn't exactly know what to do with it: So I had the bright idea to go around collecting publicly listed namecoin addresses - bitcointalk signatures, github donation addresses, developers, you name it I think I gathered about 100 addresses I wrote a bash script and put looped namedcoind to read my text file and send the minimum tx amount to a random address every second.... So that was running in a (detached) screen and I got busy and forgot about... for a few days... Some folks didn't think that was very funny and called it an "attack"

bhelkey 4y ago
So you sent less than a penny to github donation addresses ~35 times an hour every hour for days on end? And you were surprised when folks didn't enjoy this spam?
- jcpham2 4y ago
  Some might say that the original hacker ethos is exploring exploiting and even attempting to break things. I’m retrospect yes it was juvenile and regrettable but hey welcome to the game, friends. People weren’t brigading you with pitchforks back then because proof of work wasn’t destroying the planet a decade ago. Simpler times.

mgraczyk 4y ago

This has always been my idea for how I would try to extract a large amount of money if I ever managed to hack a big Defi protocol. Distract exchanges and regulators by splitting the stolen proceeds into tons of tiny amounts, send most of it to random famous accounts in small chunks, and have some of it go to my accounts which have been set up ahead of time to look like innocuous whales.

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dylkil 4y ago
with chainanalysis this would never work, eventually you have to pool the coins somewhere or funnel them through an exit, both of which will be obvious with analysis software
- cobertos 4y ago
  If you're okay with losing a decent percentage and have enough addresses that are "warmed" up with other activity, you could create enough ambiguity, no? Funneling them through the exit seems harder
  - dylkil 4y ago
    patterns will emerge eventually as you try to reconcile more and more of your scattered eth
colinmhayes 4y ago
Just mix it into a few different addresses and sell yourself some NFTs.

nicbou 4y ago

A bit of context: https://web3isgoinggreat.com/?id=tornado-cash-added-to-us-sanctions-list https://web3isgoinggreat.com/?id=tornado-cash-added-to-us-sa...

paulpauper 4y ago

It's easy to handle dust transactions. There are many ways of going about it, such as disregarding transactions that have certain parameters. Binance's wallets are not threatened by this.

spaceman_2020 4y ago

Whatever else you might say about it, crypto is never boring.

woah 4y ago

Anti money laundering laws are similar to attempts to ban encryption because "criminals might use it to plan crimes". Instead of focusing on catching criminals doing illegal things using time honored criminal investigation techniques, the government has chosen to curtail everyone's right to privacy and free speech. An analogous situation would be if the US government published a list of IP addresses which were known to have sent encrypted traffic, and declared that anyone receiving packets from these addresses (regardless of whether they wanted to or not), might be prosecuted.

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yuan43 4y ago

It looks like this only checks one of the blacklisted addresses. For the full set, see: https://home.treasury.gov/policy-issues/financial-sanctions/recent-actions/20220808 https://home.treasury.gov/policy-issues/financial-sanctions/... Blacklists have been a topic in Bitcoin for ages. The problem with a blacklist is that in principle, identity creation is easy. Tornado team gets just one new address, and it's whack-a-mole time for Treasury. I doubt this will work out the way Treasury thinks it will.

meltedcapacitor 4y ago
Isn't the point that legal crypto-fiat gateways will do (some of) the job for them, and ban stuff like that (beyond explicit Treasury bans) voluntarily?

sva_ 4y ago

So this just solidifies/removes any doubt the US's opinion that Tornado is merely used by criminals?

dudeman6969 4y ago

So what? If North Koreans stand outside of the mall and make it rain dolla bills and you pick one up doesn’t mean you are now a criminal. This is dumb as hell