13 ms·

The US sanctioning Tornado Cash and the resulting repercussions is deeply concerning. Whether or not you like crypto, you should not be supporting this if you a

The US sanctioning Tornado Cash and the resulting repercussions is deeply concerning. Whether or not you like crypto, you should not be supporting this if you are a researcher, academic, technologist, cryptographer, or privacy advocate. The code for Tornado Cash is a series of cryptographic and mathematical functions that can be repurposed for a variety of applications unrelated to privatizing user wallets. The protocol itself is designed for one reason: to give users privacy through end to end and zero knowledge cryptography. Allowing it to remain open source and accessible as a tool for blockchain privacy and codebase for cryptographic research is a net benefit for the entire world. A comparison would be that US decides to sanction the open Matrix protocol along with any user, developer, source host, or sponsor that has ever contributed to it in the past - because it can facilitate end-to-end encrypted terrorist communication.

twoodfin 4y ago
In US Constitutional law, bare communication has significantly greater protections than the non-speech-related transfer of money from one party to another.
- yata69420 4y ago
  I thought we had previously sorted out that money is speech?
  - twoodfin 4y ago
    If that money is funding speech, especially political speech, yes. If it’s being used in some random commercial transaction, not so much.
    - deleted 4y ago
      [deleted]
    - f38zf5vdt 4y ago
      If North Korea donates stolen money to American political campaigns, is that protected free speech?
      - rPlayer6554 4y ago
        North Korea is not a US citizen and "they" are not located in the United States they don't get constitutional protections.
        _carbyau_ 4y ago
        True. And that only goes to highlight that the US consitution is not a universal inherent moral code for humanity, but ideas on how a bunch of people in a region should get along. While this applies in this instance, it doesn't make it right.
      - encryptluks2 4y ago
        I'm sure if you traced campaign contributions back you'd find what is legal already isn't that much different. I'd much rather see money out of politics.
      - nl 4y ago
        Any foreign contributions to any US political campaign are forbidden, so no? > Federal law prohibits contributions, donations, expenditures(including independent expenditures) and disbursements solicited, directed, received or made directly or indirectly by or from foreign nationals in connection with any federal, state or local election. This prohibition includes advances of personal funds, contributions or donations made to political party committees and organizations, state or local party committees for the purchase or construction of an office building funds under 11 CFR 300.35, and contributions or disbursements to make electioneering communications. https://www.fec.gov/help-candidates-and-committees/foreign-nationals/ https://www.fec.gov/help-candidates-and-committees/foreign-n...
  - bb88 4y ago
    Bribing an official with money isn't speech, say.
    - Jensson 4y ago
      Politicians who got those bribes decided that it was speech, so now it is legal. (the supreme court are so closely tied to politicians that their decisions can't really be separated)
      - bb88 4y ago
        Who as far as we know will gladly accept any kind of speech in an envelope slid under the door.
    - tacocataco 4y ago
      It's not a bribe, just a donation!
  - nl 4y ago
    This is so much of an oversimplification as to be more wrong than right.
  - whoami_nr 4y ago
    Author here. That is a gross oversimplification imo. Money can be used for expression of speech but most commercial transactions shouldn't fall under it. I am of the opinion that money laundering/tax evasion etc are illegal activities which should be monitored and banned. Blanket banning a legitimate service by uploading Etherscan tags is super stupid and affects a lot of normal people. Equivalent would be to block all withdrawals/deposits for all users at an international bank because they were found to be violating AML laws in some country.
- SilasX 4y ago
  Which is going to introduce some interesting jurisprudence wherever financial systems are reducible to communication systems.
  - tsimionescu 4y ago
    A financial system is a communication system about the transfer of money (or perhaps other valuable assets). It is the transfer of money/value that brings this out of free speech and into the domain of financial law, not the mechanism of how that transfer is encoded.
nl 4y ago
This is clearly wrong. No one has said you can't distribute the TC source code. What you can't do is run a money laundering service with it. And the vast majority of TC transactions seem to have been exactly that - ways of hiding crypto from tax offices. > A comparison would be that US decides to sanction the open Matrix protocol along with any user, developer, source host, or sponsor that has ever contributed to it in the past - because it can facilitate end-to-end encrypted terrorist communication. A better comparison is the Phantom Secure sting, where a network that was used for primarily criminal purposes was shutdown. https://www.reuters.com/world/how-an-informant-messaging-app-led-huge-global-crime-sting-2021-06-08/ https://www.reuters.com/world/how-an-informant-messaging-app...
- concordDance 4y ago
  > No one has said you can't distribute the TC source code. So github removed it for no reason?
  - ohgodplsno 4y ago
    GitHub removed it because if you're a US company, you'd rather err on safety and cut all contact with not just the blacklisted company itself but everything related to it, because there is nothing worse than the US Financial Services looking into you. In the same way that if you ask me to keep a bag and I learn two days later you've been arrested for murder, I'm definitely not keeping that bag, even if the bag itself isn't accused of murder.
- whatisweb3 4y ago
  > No one has said you can't distribute the TC source code. The government has explicitly said that all property and interests in property of Tornado Cash, and anybody found to be supporting it it any way, is blocked. This is why GitHub and all hosting services will refuse to allow it on their platforms. If you try to publish TC source code, you could be considered aiding the blocked persons, and face up to 30 years in jail. If you build a new implementation of the same or similar protocol, you might also be putting yourself at risk. > And the vast majority of TC transactions seem to have been exactly that - ways of hiding crypto from tax offices. The vast majority of TC transactions are for privacy. How much of that is evading tax offices or illegal money laundering is less clear. Estimates put it in the 10-20% range[1]. There are many users that would like to use TC but have avoided it because of the lack of regulatory clarity. Had the US government instead come out saying specifically that TC-style privacy on blockchain is a right that all users should be entitled to, the rates of non-criminal activity would probably be much higher than 80-90%. > A better comparison is the Phantom Secure sting This is a poor comparison. Phantom Secure was not an open source E2EE protocol like Tornado Cash or Matrix - it was a private company and network led by a single individual who profited immensely by selling devices to known criminals. If you think TC is comparable to Phantom Secure, then Matrix and Tor should also be comparable to Phantom Secure, but of course that is a bad comparison. [1] https://twitter.com/bantg/status/1557053714405490691 https://twitter.com/bantg/status/1557053714405490691
Beltalowda 4y ago
> The code for Tornado Cash is a series of cryptographic and mathematical functions that can be repurposed for a variety of applications unrelated to privatizing user wallets. You can deconstruct anything like this: "a gun is merely a set of mechanical parts that can be repurposed for a variety of applications unrelated to shooting things". Besides, the code or math isn't banned or illegal, the organisation is. Quite different things. > A comparison would be that US decides to sanction the open Matrix protocol along with any user, developer, source host, or sponsor that has ever contributed to it in the past That is not what happened so it's not a comparison at all.
- lukeramsden 4y ago
  > Besides, the code or math isn't banned or illegal, the organisation is. Quite different things. Which shows the US government still don't understand cryptography, cryptocurrencies, smart contracts, or Open Source. The Tornado Cash "organisation" is just a bunch of researchers and open source developers, now being sanctioned for having the gaul to write code that is privacy-preserving. The Tornado Cash smart contracts live on on every chain they are deployed to, and the IPFS-hosted UI is untouched. Amusingly, you can also prove transaction history with Tornado Cash if you want to, for example, to prove to law enforcement or a bank that your funds are legitimate. So these sanctions are only actually going to affect legitimate users who simply wanted on-chain privacy, such as "famous" people with `.ens` domains attached to their addressses.
  - ohgodplsno 4y ago
    The Tornado Cash project was explicitly advertising itself as an organization and officially looking to pay developers, as well as having a copy that screamed "you can launder your money through us". Hell, the only reason half the crypto people I know mention using tornado is to obscure your money after you've stolen coins or scammed some NFTs. It was not "researchers" "banding together" for a higher privacy preserving purpose. From the very beginning it was made to launder cryptocurrency. Absolutely hilarious that cryptobros were the first ones to scream that blockchains allowed for a fully open history and that anyone could see where the funds of their banks were coming from, but the moment they can't hide that they have $200k in cryptocurrencies and that they bought $2000 worth of stuff on analbeadsandcocaine.eth, they cry foul. It's working exactly as designed.
yieldcrv 4y ago
I'm really starting to think there is an argument where the OFAC list cannot apply to smart contracts, at least on Ethereum or EVMs. OFAC literally means the Office of Foreign Assets Control, it cannot be applied domestically to American assets. In EVMs, no node is aware of which node saw a transaction first to relay it to miners. Therefore, one argument is that the deployment of the contracts cannot be known to be done in a non-American source. To strengthen an adversarial argument one could move to the account owner that paid for the contract deployment, but I believe there are challenges for that as well since sole custody of a private key cannot be known, only assumed. This isn't to weasel around any attempt at government control or consequences, only the OFAC designation. It seems like the incorrect authority.

twoodfin 4y ago

In US Constitutional law, bare communication has significantly greater protections than the non-speech-related transfer of money from one party to another.

yata69420 4y ago
I thought we had previously sorted out that money is speech?
- twoodfin 4y ago
  If that money is funding speech, especially political speech, yes. If it’s being used in some random commercial transaction, not so much.
  - deleted 4y ago
    [deleted]
  - f38zf5vdt 4y ago
    If North Korea donates stolen money to American political campaigns, is that protected free speech?
    - rPlayer6554 4y ago
      North Korea is not a US citizen and "they" are not located in the United States they don't get constitutional protections.
      - _carbyau_ 4y ago
        True. And that only goes to highlight that the US consitution is not a universal inherent moral code for humanity, but ideas on how a bunch of people in a region should get along. While this applies in this instance, it doesn't make it right.
    - encryptluks2 4y ago
      I'm sure if you traced campaign contributions back you'd find what is legal already isn't that much different. I'd much rather see money out of politics.
    - nl 4y ago
      Any foreign contributions to any US political campaign are forbidden, so no? > Federal law prohibits contributions, donations, expenditures(including independent expenditures) and disbursements solicited, directed, received or made directly or indirectly by or from foreign nationals in connection with any federal, state or local election. This prohibition includes advances of personal funds, contributions or donations made to political party committees and organizations, state or local party committees for the purchase or construction of an office building funds under 11 CFR 300.35, and contributions or disbursements to make electioneering communications. https://www.fec.gov/help-candidates-and-committees/foreign-nationals/ https://www.fec.gov/help-candidates-and-committees/foreign-n...
- bb88 4y ago
  Bribing an official with money isn't speech, say.
  - Jensson 4y ago
    Politicians who got those bribes decided that it was speech, so now it is legal. (the supreme court are so closely tied to politicians that their decisions can't really be separated)
    - bb88 4y ago
      Who as far as we know will gladly accept any kind of speech in an envelope slid under the door.
  - tacocataco 4y ago
    It's not a bribe, just a donation!
- nl 4y ago
  This is so much of an oversimplification as to be more wrong than right.
- whoami_nr 4y ago
  Author here. That is a gross oversimplification imo. Money can be used for expression of speech but most commercial transactions shouldn't fall under it. I am of the opinion that money laundering/tax evasion etc are illegal activities which should be monitored and banned. Blanket banning a legitimate service by uploading Etherscan tags is super stupid and affects a lot of normal people. Equivalent would be to block all withdrawals/deposits for all users at an international bank because they were found to be violating AML laws in some country.
SilasX 4y ago
Which is going to introduce some interesting jurisprudence wherever financial systems are reducible to communication systems.
- tsimionescu 4y ago
  A financial system is a communication system about the transfer of money (or perhaps other valuable assets). It is the transfer of money/value that brings this out of free speech and into the domain of financial law, not the mechanism of how that transfer is encoded.

nl 4y ago

This is clearly wrong. No one has said you can't distribute the TC source code. What you can't do is run a money laundering service with it. And the vast majority of TC transactions seem to have been exactly that - ways of hiding crypto from tax offices. > A comparison would be that US decides to sanction the open Matrix protocol along with any user, developer, source host, or sponsor that has ever contributed to it in the past - because it can facilitate end-to-end encrypted terrorist communication. A better comparison is the Phantom Secure sting, where a network that was used for primarily criminal purposes was shutdown. https://www.reuters.com/world/how-an-informant-messaging-app-led-huge-global-crime-sting-2021-06-08/ https://www.reuters.com/world/how-an-informant-messaging-app...

concordDance 4y ago
> No one has said you can't distribute the TC source code. So github removed it for no reason?
- ohgodplsno 4y ago
  GitHub removed it because if you're a US company, you'd rather err on safety and cut all contact with not just the blacklisted company itself but everything related to it, because there is nothing worse than the US Financial Services looking into you. In the same way that if you ask me to keep a bag and I learn two days later you've been arrested for murder, I'm definitely not keeping that bag, even if the bag itself isn't accused of murder.
whatisweb3 4y ago
> No one has said you can't distribute the TC source code. The government has explicitly said that all property and interests in property of Tornado Cash, and anybody found to be supporting it it any way, is blocked. This is why GitHub and all hosting services will refuse to allow it on their platforms. If you try to publish TC source code, you could be considered aiding the blocked persons, and face up to 30 years in jail. If you build a new implementation of the same or similar protocol, you might also be putting yourself at risk. > And the vast majority of TC transactions seem to have been exactly that - ways of hiding crypto from tax offices. The vast majority of TC transactions are for privacy. How much of that is evading tax offices or illegal money laundering is less clear. Estimates put it in the 10-20% range[1]. There are many users that would like to use TC but have avoided it because of the lack of regulatory clarity. Had the US government instead come out saying specifically that TC-style privacy on blockchain is a right that all users should be entitled to, the rates of non-criminal activity would probably be much higher than 80-90%. > A better comparison is the Phantom Secure sting This is a poor comparison. Phantom Secure was not an open source E2EE protocol like Tornado Cash or Matrix - it was a private company and network led by a single individual who profited immensely by selling devices to known criminals. If you think TC is comparable to Phantom Secure, then Matrix and Tor should also be comparable to Phantom Secure, but of course that is a bad comparison. [1] https://twitter.com/bantg/status/1557053714405490691 https://twitter.com/bantg/status/1557053714405490691

Beltalowda 4y ago

> The code for Tornado Cash is a series of cryptographic and mathematical functions that can be repurposed for a variety of applications unrelated to privatizing user wallets. You can deconstruct anything like this: "a gun is merely a set of mechanical parts that can be repurposed for a variety of applications unrelated to shooting things". Besides, the code or math isn't banned or illegal, the organisation is. Quite different things. > A comparison would be that US decides to sanction the open Matrix protocol along with any user, developer, source host, or sponsor that has ever contributed to it in the past That is not what happened so it's not a comparison at all.

lukeramsden 4y ago
> Besides, the code or math isn't banned or illegal, the organisation is. Quite different things. Which shows the US government still don't understand cryptography, cryptocurrencies, smart contracts, or Open Source. The Tornado Cash "organisation" is just a bunch of researchers and open source developers, now being sanctioned for having the gaul to write code that is privacy-preserving. The Tornado Cash smart contracts live on on every chain they are deployed to, and the IPFS-hosted UI is untouched. Amusingly, you can also prove transaction history with Tornado Cash if you want to, for example, to prove to law enforcement or a bank that your funds are legitimate. So these sanctions are only actually going to affect legitimate users who simply wanted on-chain privacy, such as "famous" people with `.ens` domains attached to their addressses.
- ohgodplsno 4y ago
  The Tornado Cash project was explicitly advertising itself as an organization and officially looking to pay developers, as well as having a copy that screamed "you can launder your money through us". Hell, the only reason half the crypto people I know mention using tornado is to obscure your money after you've stolen coins or scammed some NFTs. It was not "researchers" "banding together" for a higher privacy preserving purpose. From the very beginning it was made to launder cryptocurrency. Absolutely hilarious that cryptobros were the first ones to scream that blockchains allowed for a fully open history and that anyone could see where the funds of their banks were coming from, but the moment they can't hide that they have $200k in cryptocurrencies and that they bought $2000 worth of stuff on analbeadsandcocaine.eth, they cry foul. It's working exactly as designed.

yieldcrv 4y ago

I'm really starting to think there is an argument where the OFAC list cannot apply to smart contracts, at least on Ethereum or EVMs. OFAC literally means the Office of Foreign Assets Control, it cannot be applied domestically to American assets. In EVMs, no node is aware of which node saw a transaction first to relay it to miners. Therefore, one argument is that the deployment of the contracts cannot be known to be done in a non-American source. To strengthen an adversarial argument one could move to the account owner that paid for the contract deployment, but I believe there are challenges for that as well since sole custody of a private key cannot be known, only assumed. This isn't to weasel around any attempt at government control or consequences, only the OFAC designation. It seems like the incorrect authority.