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For those who think this is a good thing: can you explain why people should have access to HTTPS and Tor (web privacy), PGP and Signal (communication privacy),

For those who think this is a good thing: can you explain why people should have access to HTTPS and Tor (web privacy), PGP and Signal (communication privacy), but not Tornado Cash (financial privacy)?

deleted 4y ago
[deleted]
brk 4y ago
I'm not an expert on this, but I think it comes down to Tornado being primarily associated with fraud/crime related transactions. Similar to Silk Road being shut down while Amazon was left to grow. Both had some percentage of fraudulent products, but only one was viewed as existing primarily to facilitate fraud/crime.
- TarasBob 4y ago
  No. Tornado is not primarily associated with fraud or crime.
- whatisweb3 4y ago
  Tor is primarily associated with crime. Doesn’t mean we should throw away privacy tools and submit to surveillance state.
  - ricochet11 4y ago
    id take the bet that 10x more crime happens over WhatsApp chats than tor and ethereum combined
- Zamiel_Snawley 4y ago
  According to this source, about ~20% of the value that has gone through tornado cash is thought to be criminal proceeds. [1] https://techcrunch.com/2022/08/08/treasury-tornado-cash-laundering-stolen-crypto/ https://techcrunch.com/2022/08/08/treasury-tornado-cash-laun...
  - nrb 4y ago
    How much of it the hiding of otherwise-legal income? If the figure is closer to the difference between 7 billion figure and the 1.5 billion of sanctioned money then it’s only a matter of time before the treasury justifiably comes after them.
    - jsmith45 4y ago
      Laundering clean money is generally actually legal (subject to otherwise obeying relevant laws, and not trying to defraud people). For example, if somebody who owns several private businesses, including one that people frown upon but that makes them a lot of money (think producing legal pronography), but have their businesses interact in such a way that to most people it looks like they are making most of their money from real estate investments, that is generally fine as long as they follow applicable tax laws, don't try to bypass the government's anti-money laundering controls, and are not trying to defraud others by saying something like "Look how much money I'm making from real estate investment. Your investment firm should hire me." But here we had a mixer service where an estimated 20% of funds it hides were criminal in nature. It is not legal to knowingly facilitate criminal money laundering. If viewed as an unincorporated association operating this service (which is how the treasury views this), and with that sort of proportion of its use being criminal, it is implausible that the operators did not know that the service was being widely used for illegal money laundering, not just the legal kind. Because of this, the operators had a duty to modify the service they offer to make it harder to use for illegal money laundering, or to shut the service down entirely. If you want to run a smart contract based mixing service like this, you pretty much need to design it to only accept funds that someone has verified are not criminal proceeds. Perhaps you as the operator does the verification, or perhaps to avoid centralization you allow for a variety of trusted organizations to verify lawful nature of the source of the funds, with each organization after verifying creating some form of signature for the mixer user to submit along with the funds to avoid the transaction getting rejected.
      - TimJRobinson 4y ago
        > Because of this, the operators had a duty to modify the service they offer to make it harder to use for illegal money laundering, or to shut the service down entirely. You don't seem to understand how smart contracts work. You upload the code and it lives on forever. Unless you code a way to shut it down or modify it there is no way to do so. Tornado cash the app on Ethereum is still alive and well today and will probably be alive and well in 2100.
- Consultant32452 4y ago
  I would encourage anyone who considers making an argument that X is associated with $bad_thing, consider that you usually only believe it's associated because of powerful propaganda/marketing has made it seem so.
colechristensen 4y ago
Commerce Clause: >[The Congress shall have Power] To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes 4th amendment >The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated, and no Warrants shall issue, but upon probable cause, supported by Oath or affirmation, and particularly describing the place to be searched, and the persons or things to be seized. Basically, when you engage in commerce, your rights to be secure and have privacy in personal matters is diminished because you've entered into a public sphere interacting with others with money. Law gets to reach in and have influence in how people exchange money and goods, but not into their personal affairs. There are graduated levels of "this is my business" vs. "laws can be made about this behavior" depending on the activity.
- deleted 4y ago
  [deleted]
- junofan 4y ago
  So the Commerce Clause exists because the Continental Congress was pretty ineffective without it. It doesn’t really say anything about whether financial privacy should exist. That’s a question for us to figure out.
  - colechristensen 4y ago
    Financial privacy isn't a new question, the courts have interpreted the constitution and congress has legislated plenty limiting such privacy. If you want to change, it'll be a big uphill battle.
    - shukantpal 4y ago
      The question was philosophical not legal. You missed the point.
olalonde 4y ago
In my opinion, there's a good case to be made that money laundering laws themselves should be repealed[0]. But I'm afraid this is way outside the Overton window at this point and "too big to fail" (see FATF, an international organisation which gets countries financially blacklisted for not complying with its anti money-laundering rules). People have forgotten about the old-school pre-1989 way of catching criminals with police investigations, gathering evidence of a crime, etc. [0] https://www.cato.org/blog/money-laundering-laws-ineffective-expensive https://www.cato.org/blog/money-laundering-laws-ineffective-...
- JumpCrisscross 4y ago
  > pre-1989 way of catching criminals with police investigations, gathering evidence of a crime, etc. OFAC's predecessor was established in 1940. OFAC itself was founded in 1950 and expanded in 1977 [2]. [1] https://en.wikipedia.org/wiki/Executive_Order_8389 https://en.wikipedia.org/wiki/Executive_Order_8389 [2] https://en.wikipedia.org/wiki/International_Emergency_Economic_Powers_Act https://en.wikipedia.org/wiki/International_Emergency_Econom...
  - olalonde 4y ago
    Thanks for the precision. 1989 was the year the FATF was created.
- nl 4y ago
  > People have forgotten about the old-school pre-1989 way of catching criminals with police investigations, gathering evidence of a crime, etc. Nonsense. AML laws are precisely a way to ease police investigations. It's true that they aren't very effective against the largest criminals. That should be fixed by forcing disclosure of beneficial ownership arrangements but that has turned into a roadblock for investigations now precisely because AML laws mean police investigations can get that far. For example, police investigations used to be stymied by numbered Swiss bank accounts. Now AML laws mean that is no longer a protection, and now they are stymied by being unable to force disclosure of who is the beneficial owner of "This is not a criminal gang PTY LTD" from the Cayman Islands.
Barrin92 4y ago
in my opinion fairly straight-forward but I suppose unpopular answer.. they shouldn't. Privacy doesn't overrule other interests of the state and for me it's a case-by-case issue. https is primarily used for legitimate purposes and without it the internet wouldn't function in a secure way. Tornado Cash is at the other end of the spectrum. It barely makes sense to use it for anything that isn't crime. Private messaging sits somewhere in the middle. I think demands to be able to tap communication with a warrant are legitimate.
- tremarley 4y ago
  Tornado Cash wasn't primarily used for crime.
phatfish 4y ago
Being able to anonymously transfer unrestricted amounts of money around the globe simply enables tax evasion and money laundering making crime easier to profit from. People who want to see a functioning society and pay their taxes get screwed. The rich and criminals get to do whatever they want. So, business as usually really, but average person has to take the small wins when they get them. Personally i think the permanent public record of the blockchain is a good guard rail. If you want to make small transactions anonymously cash is there.
salawat 4y ago
Legally speaking, it's a non-starter. You cannot transact in such a way as to break source/destination. It is built into the system. It is an axiom that has been etched into stone, and is fundamental to the way the system works. Tax authorities can't do their thing without it. Law enforcement can't do their thing without it. The Feds can't keep foreign adversaries out of the system without a reasonable amount of compliance with GAAP. It absolutely blows that apparently professional discretion is dead; and businesses like Plaid/Visa/card providers/payment processors/merchants are passing around transaction data like hot cakes. However, the agreement was made through legislative consensus that auditability, and due process constrained financial record access served the public interest more than it hurt it. Personally, I think we're too intrusive in financial monitoring right now, especially in reference to the lower end of the income bracket, and way lighter on the higher side than we should be, but it is what it is at this point. I'm just a bit nervous about the abusability of this mechanism at this point.

deleted 4y ago

[deleted]

brk 4y ago

I'm not an expert on this, but I think it comes down to Tornado being primarily associated with fraud/crime related transactions. Similar to Silk Road being shut down while Amazon was left to grow. Both had some percentage of fraudulent products, but only one was viewed as existing primarily to facilitate fraud/crime.

TarasBob 4y ago
No. Tornado is not primarily associated with fraud or crime.
whatisweb3 4y ago
Tor is primarily associated with crime. Doesn’t mean we should throw away privacy tools and submit to surveillance state.
- ricochet11 4y ago
  id take the bet that 10x more crime happens over WhatsApp chats than tor and ethereum combined
Zamiel_Snawley 4y ago
According to this source, about ~20% of the value that has gone through tornado cash is thought to be criminal proceeds. [1] https://techcrunch.com/2022/08/08/treasury-tornado-cash-laundering-stolen-crypto/ https://techcrunch.com/2022/08/08/treasury-tornado-cash-laun...
- nrb 4y ago
  How much of it the hiding of otherwise-legal income? If the figure is closer to the difference between 7 billion figure and the 1.5 billion of sanctioned money then it’s only a matter of time before the treasury justifiably comes after them.
  - jsmith45 4y ago
    Laundering clean money is generally actually legal (subject to otherwise obeying relevant laws, and not trying to defraud people). For example, if somebody who owns several private businesses, including one that people frown upon but that makes them a lot of money (think producing legal pronography), but have their businesses interact in such a way that to most people it looks like they are making most of their money from real estate investments, that is generally fine as long as they follow applicable tax laws, don't try to bypass the government's anti-money laundering controls, and are not trying to defraud others by saying something like "Look how much money I'm making from real estate investment. Your investment firm should hire me." But here we had a mixer service where an estimated 20% of funds it hides were criminal in nature. It is not legal to knowingly facilitate criminal money laundering. If viewed as an unincorporated association operating this service (which is how the treasury views this), and with that sort of proportion of its use being criminal, it is implausible that the operators did not know that the service was being widely used for illegal money laundering, not just the legal kind. Because of this, the operators had a duty to modify the service they offer to make it harder to use for illegal money laundering, or to shut the service down entirely. If you want to run a smart contract based mixing service like this, you pretty much need to design it to only accept funds that someone has verified are not criminal proceeds. Perhaps you as the operator does the verification, or perhaps to avoid centralization you allow for a variety of trusted organizations to verify lawful nature of the source of the funds, with each organization after verifying creating some form of signature for the mixer user to submit along with the funds to avoid the transaction getting rejected.
    - TimJRobinson 4y ago
      > Because of this, the operators had a duty to modify the service they offer to make it harder to use for illegal money laundering, or to shut the service down entirely. You don't seem to understand how smart contracts work. You upload the code and it lives on forever. Unless you code a way to shut it down or modify it there is no way to do so. Tornado cash the app on Ethereum is still alive and well today and will probably be alive and well in 2100.
Consultant32452 4y ago
I would encourage anyone who considers making an argument that X is associated with $bad_thing, consider that you usually only believe it's associated because of powerful propaganda/marketing has made it seem so.

colechristensen 4y ago

Commerce Clause: >[The Congress shall have Power] To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes 4th amendment >The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated, and no Warrants shall issue, but upon probable cause, supported by Oath or affirmation, and particularly describing the place to be searched, and the persons or things to be seized. Basically, when you engage in commerce, your rights to be secure and have privacy in personal matters is diminished because you've entered into a public sphere interacting with others with money. Law gets to reach in and have influence in how people exchange money and goods, but not into their personal affairs. There are graduated levels of "this is my business" vs. "laws can be made about this behavior" depending on the activity.

deleted 4y ago
[deleted]
junofan 4y ago
So the Commerce Clause exists because the Continental Congress was pretty ineffective without it. It doesn’t really say anything about whether financial privacy should exist. That’s a question for us to figure out.
- colechristensen 4y ago
  Financial privacy isn't a new question, the courts have interpreted the constitution and congress has legislated plenty limiting such privacy. If you want to change, it'll be a big uphill battle.
  - shukantpal 4y ago
    The question was philosophical not legal. You missed the point.

olalonde 4y ago

In my opinion, there's a good case to be made that money laundering laws themselves should be repealed[0]. But I'm afraid this is way outside the Overton window at this point and "too big to fail" (see FATF, an international organisation which gets countries financially blacklisted for not complying with its anti money-laundering rules). People have forgotten about the old-school pre-1989 way of catching criminals with police investigations, gathering evidence of a crime, etc. [0] https://www.cato.org/blog/money-laundering-laws-ineffective-expensive https://www.cato.org/blog/money-laundering-laws-ineffective-...

JumpCrisscross 4y ago
> pre-1989 way of catching criminals with police investigations, gathering evidence of a crime, etc. OFAC's predecessor was established in 1940. OFAC itself was founded in 1950 and expanded in 1977 [2]. [1] https://en.wikipedia.org/wiki/Executive_Order_8389 https://en.wikipedia.org/wiki/Executive_Order_8389 [2] https://en.wikipedia.org/wiki/International_Emergency_Economic_Powers_Act https://en.wikipedia.org/wiki/International_Emergency_Econom...
- olalonde 4y ago
  Thanks for the precision. 1989 was the year the FATF was created.
nl 4y ago
> People have forgotten about the old-school pre-1989 way of catching criminals with police investigations, gathering evidence of a crime, etc. Nonsense. AML laws are precisely a way to ease police investigations. It's true that they aren't very effective against the largest criminals. That should be fixed by forcing disclosure of beneficial ownership arrangements but that has turned into a roadblock for investigations now precisely because AML laws mean police investigations can get that far. For example, police investigations used to be stymied by numbered Swiss bank accounts. Now AML laws mean that is no longer a protection, and now they are stymied by being unable to force disclosure of who is the beneficial owner of "This is not a criminal gang PTY LTD" from the Cayman Islands.

Barrin92 4y ago

in my opinion fairly straight-forward but I suppose unpopular answer.. they shouldn't. Privacy doesn't overrule other interests of the state and for me it's a case-by-case issue. https is primarily used for legitimate purposes and without it the internet wouldn't function in a secure way. Tornado Cash is at the other end of the spectrum. It barely makes sense to use it for anything that isn't crime. Private messaging sits somewhere in the middle. I think demands to be able to tap communication with a warrant are legitimate.

tremarley 4y ago
Tornado Cash wasn't primarily used for crime.

phatfish 4y ago

Being able to anonymously transfer unrestricted amounts of money around the globe simply enables tax evasion and money laundering making crime easier to profit from. People who want to see a functioning society and pay their taxes get screwed. The rich and criminals get to do whatever they want. So, business as usually really, but average person has to take the small wins when they get them. Personally i think the permanent public record of the blockchain is a good guard rail. If you want to make small transactions anonymously cash is there.

salawat 4y ago

Legally speaking, it's a non-starter. You cannot transact in such a way as to break source/destination. It is built into the system. It is an axiom that has been etched into stone, and is fundamental to the way the system works. Tax authorities can't do their thing without it. Law enforcement can't do their thing without it. The Feds can't keep foreign adversaries out of the system without a reasonable amount of compliance with GAAP. It absolutely blows that apparently professional discretion is dead; and businesses like Plaid/Visa/card providers/payment processors/merchants are passing around transaction data like hot cakes. However, the agreement was made through legislative consensus that auditability, and due process constrained financial record access served the public interest more than it hurt it. Personally, I think we're too intrusive in financial monitoring right now, especially in reference to the lower end of the income bracket, and way lighter on the higher side than we should be, but it is what it is at this point. I'm just a bit nervous about the abusability of this mechanism at this point.