102 ms·

Arrest of suspected developer of Tornado Cash

446 points by langitbiru 4y ago

once_inc 4y ago
If this developer only created the mixing service smart contract and wasn't actively operating it or advocating for it, I doubt Dutch judges can rule him guilty for money laundering. The 9/11 reference made by others is very much on par.
- throwaway0a5e 4y ago
  Even if he only created the contract the developer essentially thumbed his nose at the state. That is the kind of "crime" that government takes very seriously. If they want to screw him they will. It's just a question of how thick the veneer of legitimacy on the screwage will be. It's not like this guy has some vocal political minority to back him up so there's not much to stop them.
  - once_inc 4y ago
    Building a mixing service that allows people to buy stuff without their employers being able to track it is a legitimate, non-trivial reason. These mixers are privacy enhancers. Privacy is a general term, and doesn't have to relate to evading the government. If you don't want your employer to know you've bought an NFT from your company's direct competitor, that is a privacy request too.
    - threeseed 4y ago
      Except that privacy is not some human right enshrined in law that usurps other laws. If you facilitate money laundering that is still a crime even if the intent was for legitimate reasons like privacy.
      - jiriknesl 4y ago
        Well, maybe we should start lobbying to make it so.
      - once_inc 4y ago
        Article 12 of the United Nations's Universal Declaration of Human Rights [0] would like a word. [0] https://www.un.org/en/about-us/universal-declaration-of-human-rights#:~:text=No%20one%20shall%20be%20subjected%20to%20arbitrary%20interference%20with%20his,against%20such%20interference%20or%20attacks https://www.un.org/en/about-us/universal-declaration-of-huma....
      - diogenes1 4y ago
        so when are we arresting engineers who built roads and trucks that were used for money laundering?
        deleted 4y ago
        [deleted]
        arlcode 4y ago
        At least 2013 put probably for much longer. https://www.wired.com/2013/03/alfred-anaya/ https://www.wired.com/2013/03/alfred-anaya/
- threeseed 4y ago
  > I doubt Dutch judges can rule him guilty for money laundering. Sensible position given he isn't actually being charged with money laundering. He is being charged for facilitation and since you're a little sloppy with the facts there will assume that you're not a EU/NL lawyer with expertise in these matters. I know as a layman I will assume that FIOD/Public Prosecutors wouldn't arrest him if they didn't anticipate a successful conviction.
codyb 4y ago
If someone built something that said "Launder your money here" and it took in a bunch of money, and then disbursed it sans fees to hide where it came from... they'd say it was money laundering and arrest the person. Can anyone explain the difference here? Or why anyone is "shocked" that this is happening cause it's crypto? Just seems kinda childish to think crypto's somehow special and not just a tool for moving money around. Do people really think cause it's on the block chain it can evade every law in the world? And cause it's open source nobody's going to pay any attention?
- deleted 4y ago
  [deleted]
- whatisweb3 4y ago
  A private key is a 256 bit integer. > If someone built something that said "Launder your [256 bit integers] here" and it took in a bunch of [256 bit integers], and then [encrypted] it sans fees to hide where it came from... they'd say it was [256 bit integer] laundering and arrest the person. When you compare this to encrypting 256 bit integers, text, or E2EE chat protocols, the shock is easier to understand. People should not be treated as a criminal for building Matrix E2EE protocol that enables privacy, they should not be treated as criminal for building Tornado Cash protocol that enables privacy.
  - mint2 4y ago
    Okay so you’re saying NFTs are absolutely meaningless, what the holder solely owns is a 256 bit integer and absolutely nothing else? Anyway, in this case unlike debatably with nfts, there is concrete value tied to possessing knowledge of the integer so acting like it’s just sharing random numbers is deceptive and rather easily detected deception. resorting to deceptive arguments generally makes people turn against the position of the one trying to deceive so if advocating for tornado devs, one should avoid that argument unless one is actually trying to make people against them.
    - whatisweb3 4y ago
greatgib 4y ago
It is said that they are prosecuted for:. "environmental crime" Good example again of low profile laws that are abused by government and police forces to get to their objectives.
- seanw444 4y ago
  Thanks to government bloat. Have less minute laws, have less agents to enforce minute laws, have less funding to hire agents to enforce minute laws.
- polytely 4y ago
  Read it again, that's not at all what it says. >Public Prosecutor’s Office for serious fraud, environmental crime and asset confiscation. The arrest comes from the department that covers 1. serious fraud, 2. environmental crime, 3. asset confiscation There is nothing in that release that indicates that this arrested was because of environmental crime. You should retract your post.
dcolkitt 4y ago
A lot of the apologists for this are making arguments along the lines of "being decentralized doesn't make you exempt from the rules" or "imagine if a bank laundered this much money". The problem is it doesn't make sense to treat protocols like companies. And it definitely doesn't make sense to treat protocol devs as if they were the executives of those companies. The CEO of a bank and the lead dev of a protocol have very very different powers and responsibilities, and we can't just throw our hands up in the air and say "the law's the law, and you gotta follow it" (even when it's literally impossible given the decentralized and autonomous nature of the protocol). Analogously when joint-stock corporations first entered the scene it required the development of whole new branches of Western law. That law had to be tailored to reflect the realities and nature of joint-stock corporations. What would have been very dumb is simply to pretend like nothing changed and say "same rules apply" and make individual shareholders liable for the action of the corporate entity the same way we're trying to make software devs liable for the action of the decentralized protocol.
- mehlmao 4y ago
  My understanding is that the developers get a cut of the money that's laundered through tornado.cash
- yawnxyz 4y ago
  Isn't this kind of like the dev of SMTP getting arrested because two people committed a crime by communicating through email?
  - closeparen 4y ago
    Communication providers are not required to obtain licenses and mitigate illegal content in the same way that money service businesses are required to mitigate money laundering. Some people think they should be! I don't agree. But it is a thing governments could do.
  - jiggawatts 4y ago
    Or arresting Ron Rivest, Adi Shamir, or Leonard Adleman for helping criminals hide their communications from law enforcement.
from 4y ago
Kind of unrelated but in a lot of ways I feel like an OFAC designation is a bill of attainder that is only legal because it’s used exclusively against foreigners. 1. Designate a businessman as an SDN 2. Wait for them to conduct some transaction that uses dollars or involves any American company in some way (if you know about correspondent banking you know this will almost inevitably happen) 3. Wait for them to travel to country friendly with America 4. Extradite for conspiring to violate IEEPA This has happened before (see US v. Tajideen). It seems like there should be some kind of legal case against this which may happen now given all of the rich Russians that are having their stuff seized on this basis. Edit: And the interesting thing is that the Treasury Department accused Tajideen of being a Hezbollah financier which they could have charged him with when he was extradited from Morocco but they didn’t which to me makes it seem like there wasn’t much of a basis for his designation to begin with.
pharmakom 4y ago
Can anyone explain why Tornado cash dev was arrested but Zcash has been operating for years?
- flarex 4y ago
  North Korea didn't use them yet to layer stolen funds. Just a matter of time before ZCash and Monero developers are all arrested if this is the precedent.
smashah 4y ago
This whole situation gives crypto more utility/validity. Arresting open source devs for such a simple smart contract? Insane!
ehathaway 4y ago
This isn't just the arrest of a developer expressing his freedom. Its the arrest of a developer who was knowingly part of a group of people who had the intention of deploying code (via smart contracts). The deployment of the code facilitated activities that were claimed to be illegal. The issue isn't owning or writing viruses or malicious code, the issue is distribution and deployment of such code.
- matthewdgreen 4y ago
  Is distribution of code substantially different from distribution of a book? Does something about uploading code become different when we call it "deployment"? I'm really asking here, because there are some pretty fine lines that need to be drawn.
stalinford 4y ago
You'll never find Satoshi Nakamoto
labrador 4y ago
At least in the US, providing tools that you know will be used to commit a crime is a crime Alfred Anaya Put Secret Compartments in Cars. So the DEA Put Him in Prison https://www.wired.com/2013/03/alfred-anaya/ https://www.wired.com/2013/03/alfred-anaya/
- rklaehn 4y ago
  There are many non criminal use cases for private electronic transactions - just as there are for cash. So why is it a crime to build a thing that has both legal and illegal applications, like knifes, guns, dollar bills, gold coins, ... ? And don't get me started with "Most activity on tornado is illegal". It is a privacy service. So unless it is broken we don't know this. Are we going to take the word of the "Authorities" for this?
  - labrador 4y ago
    I'm not a lawyer, but it seems to me if he can be connected to a single instance of illegal activity on Tornado then he's toast
- matteopey 4y ago
deleted 4y ago
[deleted]
wendizo 4y ago
Silver lining: the powers that be tacitly admit that cryptocurrency is money.
yuan43 4y ago
The effect of all of this nonsense will to drive developers into pseudonymity. It won't solve the "problem" of developers building privacy tools. It won't stop experimentation with shitcoins. But it will eliminate the phenomenon of the Buterin-style project lead and "core developer". The bullseye has been painted. And now those who have reaped the benefits of fame will come to know why Satoshi concluded that it was a trap to be avoided. The legal pressure that will be brought to bear on the Ethereum foundation to enact various changes will be enormous and never-ending. It doesn't matter whether or not this case flies. That will take many years to sort out. In the meantime, rational actors will do the rational thing. Everyone else will receive summons and indictments.
- deleted 4y ago
  [deleted]
deleted 4y ago
[deleted]
xbruteforce 4y ago
Online privacy is at stake for years already. The cypherpunks have said it.
rank0 4y ago
What the fuck. I’m a big time crypto hater but this is absurd. Are we really moving back in this direction? Let’s just ban math because criminals use cryptography.
Rackedup 4y ago
I just don't understand how this is considered money laundering... this is coin laundering and it isn't regulated, as far as I know. The people will still have to explain where the cash comes from when they convert coins to cash?
dimensionc132 4y ago
The problem is that the devs decided to use a Microsoft service (Github) which has its jurisdiction in the US of A. If only they had used Codeberg, this would not have been an issue at all, as Codeberg is self hosted and a free hosted version is in Germany.
Arnt 4y ago
So a software developer is held responsible for the software. If the software is largely SaaS, then I can see the sense in that. A software developer of SaaS is also a service developer, arguably even a service operator although that depends on how the service is developed and operated. I'm sure the judge will be thrilled to have to listen to arguments about the with the nuances of dev, ops, devops and a distributed platform such as that which executes Ethereum's smart contracts.
- 2OEH8eoCRo0 4y ago
  Being arrested is not that big of a deal- it merely means they suspect that you committed a crime and want to question you. I would also wait and see what they are accused of, maybe there is more to it than simply contributing to an open source project.
  - rascul 4y ago
    It can easily turn into a big deal if the arrest means you're locked in a cell for awhile.
    - 2OEH8eoCRo0 4y ago
      What is the alternative?
      - rascul 4y ago
        I guess the alternative is to not be arrested and locked in a cell? That's kind of up to someone else.
      - throwaway0a5e 4y ago
        Summons the person to court and only issue an arrest warrant if they fail to appear. This is SOP for the bulk of nonviolent crimes in the US.
  - retcore 4y ago
    In the UK arrest is lawful simply to ensure that your statement or interview can be obtained, entirely without any kind of suspicion. Still will disqualify you for automatic entry in the US however.
paulsutter 4y ago
There’s a big legal distinction whether the developers are collecting fees from operation of the service, since that’s very different from merely developing open source software. I’m curious how this develops > It is suspected that persons behind this organisation have made large-scale profits from these transactions.
- rvnx 4y ago
  Exactly like original of developers of Bitcoin, it's not because they are not running the nodes themselves that they are not benefiting from facilitating ponzi or money laundering. Nodes are running the network, and developers earn through increased coin value and both are necessary part of the operations of the service.
  - Anunayj 4y ago
    Yup exactly, the mistake these guys did here is, instead of creating a token that you have to buy to use the service, then giving yourself 50% of the token supply, and having 50 of your keys control a "DAO" for governance, they decided to flatly price.
    - paulsutter 4y ago
      You've inadvertently explained why a transparent ruse like that wouldn't work. If you want to develop serious privacy technology, make it open source and don't benefit from it financially
      - Anunayj 4y ago
        Oh that was sarcasm directed at the state of cryptocurrencies today :P
  - deleted 4y ago
    [deleted]
  - paulsutter 4y ago
    Coders logic != legal system
ucha 4y ago
This makes so little sense to me. I don't know how much information is made public by the Dutch justice system but I would really like to see an affidavit or something like it to understand what specific charges are levied against that developer.
- tgv 4y ago
  Once the trial starts, certainly journalists should be able to read all of it, unless the court decides some of it is too sensitive. The verdict will be published at rechtspraak.nl.
  - seanw444 4y ago
    A trial that has far-reaching effects on the populous, being hidden from the populous. That would be entirely unsurprising.
aljsuhbydnhd 4y ago
throwaway4good 4y ago
This sentence provides a hint of what is going on: "Since Monday 8 August 2022 Tornado Cash has been placed by the US government on the OFAC sanctions list of America."
- threeseed 4y ago
  "In June 2022 the het Financial Advanced Cyber Team (FACT) of the FIOD started an criminal investigation against Tornado Cash" And the article is from 12 August. So NL would have informed US who then put them on a sanctions list.
Tepix 4y ago
Wow, just wow. Am i alone in thinking this is not going to fly if all he did was write some software that helps with your financial anonymity? There must be more. Perhaps he also deployed it? That would be a different story. The article is quite murky in that regard. Perhaps they don't know yet. In there is an interesting paragraph explaining what Tornado Cash is: … The (criminal) origin of the cryptocurrencies is often not or hardly checked by such mixing services. Users of a mixing service mostly do this to increase their anonymity. Note how they sneaked "criminal" in there. There are of course legitimate reasons to desire anonymity for financial transactions! It's one of the reasons people like to pay cash. Satoshi Nakamoto is wise to remain anonymous.
- pie_flavor 4y ago
  An American could be excused for thinking it is not going to fly if all he did was write some software that helps with your financial anonymity. Unfortunately much of the world does not operate under American law.
- parasense 4y ago
  > The (criminal) origin of the cryptocurrencies is often not or hardly checked by such mixing services. Even omitting the "criminal" implication, that sentence has a big problems. > The origin of the cryptocurrencies is often not or hardly checked by such mixing services. Let me rephrase that: > The origin of cryptocurrencies is not checked by cryptocurrencies services. The idea is ridiculous at face value. However, it does illustrate the best & worst part of blockchains -- everything goes on the blockchain. The government loves that audit trail. But how is an ordinary person to know some wallet addr is a pedophile, or terrorist, or druglord, or whatever? I mean that as an honest question. Is there some public crypto-wallet watch-list everyone is supposed to be referencing prior to doing p2p transactions? Like you, I wonder how this person could be prosecuted? In the free-world, writing software is considered free-speech, at least in the USA, but I'm not sure in the Netherlands or wherever this person was apprehended? There are of course exceptions... like writing malware or viruses, etc.. So like you, the situation seems to entail something more.. like perhaps running an operation with clearly articulate facts indicating criminal activity. You know, the old saying goes "it's what you know, and when you knew it". So like, if the person was aware of criminal activity, taking part in criminal activity, etc.. I suppose an argument could be made.
deleted 4y ago
[deleted]
lizardactivist 4y ago
Sad to see the EU bow down to the criminal racket that is the US financial system. Even if this developer is not extradited, the US has again succeeded in maintaining the culture of fear, where they can get their slimy hands on anyone anywhere for any reason they want.
- jacooper 4y ago
  > Sad to see the EU bow down to the criminal racket that is the US financial system. The EU in general is extremely hypocritical when it comes to privacy, its probably an opportunity to crack down on crypto while it's down. You see all the laws that aim to put a stop to big tech, and rightly so because their government won't do anything. In the same time, when privacy protections are against the EU itself, it suddenly doesn't work, or it needs monitoring like their horrible attempt using the chat control law, which even faces backlash from inside, like from Germany.
- omginternets 4y ago
  Where did you see that this was connected to the US financial system? They mention in passing that the US has sanctioned Tornado Cash, but I didn't get the impression that this was the reason why this person was arrested.
  - diogenes1 4y ago
    there have been multiple coordinated attacks being made, it's quite naiive to assume US is not involved here
    - omginternets 4y ago
      I'm very open to the idea that they are. I'm asking whether there's evidence.
- potatototoo99 4y ago
  I don't think it is related. Maybe just the increased publicity quickened the arrest, but I don't see any hope of extradition of a Dutch national to the US for sanction violations announced just a few days prior.
clippablematt 4y ago
Ah yes, arrest developers of open source privacy code and blame them for North Korea money laundering rather than going after the people actually committing crimes. Sounds about right. Privacy is not a crime, it’s a human right! Sorry that it makes the polices job harder, but our rights are more important. And didn’t we go through all this already in the 90s? Are we now gonna start arresting all cryptographers? This is because they don’t like money that is independent from state control. They hate the idea of bitcoin and eth not being $ or €. The large majority of money laundering happens through banks, who just pay a fine and sweep it under the rug.
- desindol 4y ago
  Privacy is a human right? citation needed.
  - josu 4y ago
    Universal Declaration of Human Rights: >Article 12 >No one shall be subjected to arbitrary interference with his privacy, family, home or correspondence, nor to attacks upon his honour and reputation. Everyone has the right to the protection of the law against such interference or attacks.
    - jasonlotito 4y ago
      That allows for interference with someones privacy. Basically, interference of privacy based on reason or system is allowed. It does give you the right to not be subjected to interference of your privacy from random choice or personal whim is not. According to the article, that right has not been broken. Moreover, you do not have a right to privacy. Rather, you have a the right to not have your privacy arbitrarily interfered with. This is a pretty important distinction.
  - implements 4y ago
    (From Wikipedia) The Fourth Amendment to the Constitution of the United States ensures that "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." (Also) Article 12 of the Universal Declaration of Human Rights states: No one shall be subjected to arbitrary interference with his privacy, family, home or correspondence, nor to attacks upon his honour and reputation. Everyone has the right to the protection of the law against such interference or attacks. It’s generally understood that without privacy people are effectively disenfranchised politically, because any expression of an contentious opinion or association with subversive or dissident thinkers becomes potentially so harmful that wise people would avoid both and keep almost entirely to themselves or family.
dangerface 4y ago
I understand why they arrested him but it doesn't seem like he did anything thats illegal so it will be interesting to see what charge they bring or how they intend to differentiate between tornado cash and HSBC laundering money for cartels.
- jsmith45 4y ago
  He created and presumably deployed a service that facilitates illegal money laundering. From what I have heard approximately 20% of the volume is of coins are known to come from crime. That far exceeds the threshold for which an organization must take steps to try to prevent these things. It might not have been possible change the existing deployed contracts, or to shut the service down entirely (I’m not actually sure what governance features if any the core contracts have), but there are things that could have been done nevertheless, like shutting down the website that provided a convenient front end. Basically, unless he can show that he genuinely did not know that the service was laundering illegal funds on a large scale, or that he did everything in his power to stop this use, he is probably screwed. This is especially true if he profits in any way from the operation of TC, like if he was operating any relay nodes that took a fee for funding anonymous withdrawals.
  - dannyw 4y ago
    The frontend started blocking OFAC-sanctioned addresses earlier this year. Do you think this logic should also apply to encrypted messaging apps? If you're a contributor to Matrix, or another open source FOSS tool, and you hear reports that criminals are using it (because criminals are a subset of the human population), should you be legally required to take all steps to backdoor it?
    - jsmith45 4y ago
      If you are aware that your app is being very disproportionately used to facilitate criminal transactions, you would generally be required to take steps to try to prevent or discourage such usage. This is especially true if you are profiting from your app (as the governments think the tornado cash developers were). This does not necessarily mean backdooring the app. Remember how Kim DotCom went down for operating MegaUpload while actively knowing that one of the bigger usages of the site was piracy, and not doing enough to discourage or prevent such use? The concept here is not all that different. This is why I would never contribute to some open source projects like metasploit that come too close to falling on the wrong side of the line.
louwrentius 4y ago
He wasn’t just developing software, he seems to also been involved with operating the Tornado mixer service, thus enabling / facilitating money laundering and evasion of sanctions.
- yokem55 4y ago
  The 'service' is a contract on the chain. It exists and operates because thousands of other people are running nodes that run that chain. It still works today if you access the static front end website via ipfs or have a local clone of it or manually build and submit the transactions via your own local node. So, once deployed, there really isn't anything to 'run' in order for it to continue.
  - louwrentius 4y ago
    > thousands of other people are running nodes that run that chain Then thousands of people - including him - enable tax evasion and sanctions. Thank you for providing a good example why all crypto should be banned. And yes you can ban cryptocurrencies by outlawing exchanges.
- dylkil 4y ago
  tornado cash doesnt facilitate money laundering, it just obfuscates the source of eth, like converting debit into cash, those funds still need to enter the real system in some "legitimate" manner in order to be considered laundered.
  - louwrentius 4y ago
    Any kind of mixer is intended to anonymise transactions and that doesn't really have any legitimate, legal use case. Que remarks about 'privacy' in 3,2,1...
    - Eduard 4y ago
      GDPR
    - 4y ago
deleted 4y ago
[deleted]
Andrew_nenakhov 4y ago
A message is circulating in russian crypto groups, that two more developers were arrested: Roman Panchenko in Seattle, and Nikita Dementyev in Tallinn. (I can't verify the veracity of this report, but if true, this looks like it was a coordinated international police operation)
- dutchbrit 4y ago
  Roman Panchenko, interesting.. he also lives in Amsterdam according to LinkedIn. Also, both the names you mention, their Instagrams have both been taken offline.
fleddr 4y ago
How many people listed in the Panama papers have been arrested? Their assets seized? Fines? Zero. London's "the city" is pretty much one giant laundering operation for Saudi and Russian dirty money. Money laundering, monetary privacy, wealth obfuscation is perfectly fine. It only becomes an issue when it becomes accessible to us simple minded folks too. The urgency to stop this tech really tells the tale. Or in other words, laundering "doesn't scale".
- joe_the_user 4y ago
  Sure, I've even heard speculation that the leak of the various money-laundering documents involve an effort to monopolize laundering to a even small group. That's as maybe but no kind of money laundering should have our sympathy. Most money laundering does damage - the kind that isn't for directly illegal activities often involves local corrupt exploiting their control of local resources (Iran, a major oil producer, burning 4% it's oil for bitcoins to escape sanctions, for example).
- tokai 4y ago
  Did you look it up or are you just spouting what ever you can dream up to fit your argument? Lots of people all over the world have been arrested based on the panama papers.
  - 5350-uiop-1130 4y ago
    pretty sure the only people who suffered where the execs running the company, losing their yearly bonus,...and only because they embarrassed their overlords. "In March 2018, Mossack Fonseca announced that it would cease operations at the end of March due to "irreversible damage" to their image as a direct result of the Panama Papers"
    - Kbelicius 4y ago
      "In October 2020, German authorities issued an international arrest warrant for the two founders of the law firm at the core of the tax evasion scandal exposed by the Panama Papers. Cologne prosecutors are seeking German-born Jürgen Mossack and Panamanian Ramón Fonseca on charges of accessory to tax evasion and forming a criminal organization"
pxeger1 4y ago
If I create a new type of leather wallet and then North Korea uses it for money laundering, can I be charged for "facilitation"? What about if I discovered electricity, which lead to money laundering? Where is the line here, and who defines it?
- jeroenhd 4y ago
  If you take part in production, delivery, sales, or distribution of said in North Korea: yes. If you provide North Korea with designs of technology restricted by sanctions: yes. If at least one seventh of all electricity you generate is used for criminals: yes. The line is defined by governments, law enforcement, and the courts. The judge may dismiss all charges if they see fit, and the government can add or remove legislature to criminalize or decriminalize certain behaviour within the bounds of constitutions and international treaties.
- PeterisP 4y ago
  The key line is intent. If you create a new type of leather wallet that just happens to be used for money laundering, that is not a crime. If you create a new type of leather wallet specifically designed with the goal so that it's easier to smuggle stuff, you can and should be charged for aiding and abetting if they can convince the jury that you did this knowingly with this intent. If you do the latter and simply want to claim that it just so happened without your intent, well, the courts are there to resolve this dispute, but it can go both ways - especially as soon as there's teamwork and some record of communications, there's often evidence to support or contradict claims of intent. Like, if you made tests where you run your new wallet through various popular models of airport scanning machines testing whether they succeed at detecting something hidden, and advertise the specific airports which do/don't detect it, that would be some evidence about your likely intent.
- tgv 4y ago
  The people who write viruses/trojans/RATs/malware, are they just making a product? What if they sell it?
- Rackedup 4y ago
  I think that they are doing this purely to hurt crypto. They keep adding new laws when they see an opportunity where crypto could become more useful... it's like a frog in a warming pot.
whatisweb3 4y ago
My comment from 2 days ago: > 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. Discussion: https://news.ycombinator.com/item?id=32404966 https://news.ycombinator.com/item?id=32404966
- JumpCrisscross 4y ago
  > US sanctioning Tornado Cash Zero evidence this is connected to U.S. sanctions. Dutch law protects even cash transactions less than American law. When the investigation started, in June, the U.S. had already released evidence Tornado Cash was used to launder money. If a Dutch person kept working on it, it might be trivial to show they broke Dutch criminal statute.
  - mr_beans 4y ago
    The NL government org that arrested him specifically mentions the US sanctions in their press release https://www.fiod.nl/arrest-of-suspected-developer-of-tornado-cash/ https://www.fiod.nl/arrest-of-suspected-developer-of-tornado...
    - JumpCrisscross 4y ago
      > org that arrested him specifically mentions the US sanctions in their press release I'm not arguing it's irrelevant. Just that this doesn't look like a sanctions arrest. Tornado Cash was sanctioned on 8 August. There hasn't been enough time for someone to violate the sanctions and produce enough evidence to get arrested. More likely: the same alleged crimes that got Tornado sanctioned prompted this arrest.
diogenes1 4y ago
one of the most shameful moments in digital human rights after the arrest of pgp creator in 1993. Code is speech, it is not a weapon. Banning maths is fascist
- jeroenhd 4y ago
  You can call it money laundering speech if you want, but that doesn't change the fact money laundering is illegal. Selling skimming services is illegal even if you don't skim people yourself. Nobody is banning technology or math, only specific, usually criminal, uses of technology and math are banned.
- tzs 4y ago
  > Banning maths is fascist What about banning chemistry and physics? If I fire a gun and the bullet hits someone I get arrested (and maybe even if it doesn't hit anyone if I am somewhere were shooting guns is not illegal), yet all I did was use some levers (physics) to add compress a spring adding potential energy to it (physics) which then got converted to kinetic energy (Hooke's law, more physics), which imparted energy to some chemicals starting a reaction (chemistry) that produced expanding gases that caused the bullet to rapidly leave the barrel of the gun, where it followed a ballistic trajectory (physics). Or what about banning biology? Look closely at other animals sometimes. Things that in humans we'd call rape and murder and robbery are quite common. Millions of years of evolution have selected for animals that do those things. Humans too have the same propensity to do many of those same things, and would do so more often if they were not illegal. Just look at what happens when people find themselves in situations where those laws do not apply or where they have no chance of being punished, such as when a country successfully invades another country.
  - diogenes1 4y ago
    you fired the gun, not the manufacturer. why would they arrest the manufacturer/inventor/etc for something that was done by you?
    - arlcode 4y ago
nootropicat 4y ago
Governments started the offensive. Now decentralization actually starts to matter. Ethereum is switching to PoS at the last minute, PoW miners are very easily forced to enforce sanctions because they can't hide due to enormous physical and legal presence. Home stakers can easily hide and break the law.
- dannyw 4y ago
  Decentralization really is starting to matter. It's a wake up call for a lot of developers in this space, that pragmatic shortcuts (e.g. centralized RPCs, centralized stablecoins like USDC) have disadvantages that may no longer outweigh the advantages.
  - diogenes1 4y ago
    true. none of smart contract blockchains today are actually a practical tool till lightclients that run on smartphones are mainstream
    - codehalo 4y ago
      The problem is that Apple and Google have a kill switch.
      - yokem55 4y ago
        The light clients that the parent envisions could potentially run entirely in javascript within a browser. No app store needed unless the browser engines start blacklisting bits of js.
        boppo1 4y ago
        Doesn't that leave them WIDE open to malicious code?
    - nootropicat 4y ago
      I don't think they are going to ever be mainstream. Even a lightnode that only downloads headers is going to eat up battery fast. If a centralized service works for you, what's the point? What's necessary is to allow actually persecuted people to run nodes on their computers.
dannyw 4y ago
For those who think this is good: Private keys can be represented in text. Like this: KwTHJw865SLeTAjK7otYb5bL5mwutBb2vDxxF7kGf5XvY7QttnvM Encrypted messaging apps like Matrix or Signal, can be used to send strings with private keys, anonymously. It's very difficult to hold a position that financial privacy tools are bad, but encrypted messaging apps are good; because they are really not that different.
- jeroenhd 4y ago
  Messenger application are not (yet :( ) required to comply with anti money laundering regulations. Financial systems do. The two are not the same.
- cortesoft 4y ago
  You are thinking like a computer programmer and not a lawyer. There is a classic article that demonstrates the difference called “What colour are your bits?” https://ansuz.sooke.bc.ca/entry/23 https://ansuz.sooke.bc.ca/entry/23 The law isn’t actually talking about math or numbers or encryption, even though it seems like it is to computer programmers. The math doesn’t matter to the law, what you use it for does.
- lottin 4y ago
  I don't find it difficult.
  - bsima 4y ago
    Please elaborate
    - lottin 4y ago
      The fact that two actions are achieved by similar (or the same) means doesn't make those actions ethically equivalent.
- catchclose8919 4y ago
  Ppl work hard to make sure they remain different for 99.9% of non-technical people (eg. banning anonimous cryptocurrency)... once this is done, you become and outlier by using different tools than average people, and special means of surveilance can be deployed against you personally at much lower cost... Ofc this is bad, but the bigger purpose is always "power over the proles". You can let most people have most of their privacy as long as you don't touch the "power distrubution tools" (money) - eg. if messaging is private, but money is on a blockchain where all wallets are mandatory to have an associated human identity, it doesn't matter that some sketchy transactions happen on the edges. Bitcoin would be targeted too if it were used to eg. pay wages and fund companies on a large scale. Probably Tornado Cash enabled some activity that was large scale enough to not be considered just "on the fringes" anymore...
jeroenhd 4y ago
This is an interesting case because it's applying financial law to a decentralised cryptocurrency operation. If research shows that Tornado was indeed processing a billion dollars of criminal funds then I'm not surprised arrests have been made even though it may be hard to prove actual involvement by the network operators. These numbers come close to the fund processing capacity of a small financial institution and there are The points about DAOs are also interesting. DAOs have no central authority or elected leadership. Setting up a DAO should not be enough to get out of legal responsibilities of running a financial institution, but people voting in DAOs also shouldn't be treated like CEOs because they have very little actual power. Conviction in this case might have a serious impact on decentralized crypto schemes. DAOs are a great technical workaround for not having a direct kind of leadership but the real world doesn't care about fancy technical solutions. Someone sets up a certain system and that someone has the responsibilities that come with setting up such system. If that service a free website, the responsibilities are extremely limited; if that service is a financial institution, your responsibilities become more serious. Re: "this is just a dev", the dev also presumably ran the software they created, and with a seventh of the processed volume being criminal funds, it's almost sure that they operated on dirty funds at some point. Even if the developer's role in the (suspected criminal) DAO is considered insignificant, this might make the dev a money mule as he temporarily stored stolen funds in their crypto wallet. According to Dutch law, money mules may be prosecuted as complicit with fraud and any other financial crimes that take place. One might defend the cryptocurrency operators by claiming that they can't verify the identities of their customers to comply with money laundering regulations, but that only underlines the illegality of the system: if your system isn't capable of complying with the law, you shouldn't operate such a system. It's like claiming you don't need seat belts in your cars because you can't figure out how seat belts work: your lack of control or creativity is not society's problem. With how overloaded the courts are, it'll take months or even years to see the impact of this arrest. Whatever the outcome, it'll have a big impact.
- markisus 4y ago
  The dev doesn't operate the TornadoCash contract. The code is actually run by people who operate ethereum nodes. After the initial deployment, the dev has zero involvement.

446 points by langitbiru 4y ago

If this developer only created the mixing service smart contract and wasn't actively operating it or advocating for it, I doubt Dutch judges can rule him guilty for money laundering. The 9/11 reference made by others is very much on par.

throwaway0a5e 4y ago
Even if he only created the contract the developer essentially thumbed his nose at the state. That is the kind of "crime" that government takes very seriously. If they want to screw him they will. It's just a question of how thick the veneer of legitimacy on the screwage will be. It's not like this guy has some vocal political minority to back him up so there's not much to stop them.
- once_inc 4y ago
  Building a mixing service that allows people to buy stuff without their employers being able to track it is a legitimate, non-trivial reason. These mixers are privacy enhancers. Privacy is a general term, and doesn't have to relate to evading the government. If you don't want your employer to know you've bought an NFT from your company's direct competitor, that is a privacy request too.
  - threeseed 4y ago
    Except that privacy is not some human right enshrined in law that usurps other laws. If you facilitate money laundering that is still a crime even if the intent was for legitimate reasons like privacy.
    - jiriknesl 4y ago
      Well, maybe we should start lobbying to make it so.
    - once_inc 4y ago
      Article 12 of the United Nations's Universal Declaration of Human Rights [0] would like a word. [0] https://www.un.org/en/about-us/universal-declaration-of-human-rights#:~:text=No%20one%20shall%20be%20subjected%20to%20arbitrary%20interference%20with%20his,against%20such%20interference%20or%20attacks https://www.un.org/en/about-us/universal-declaration-of-huma....
    - diogenes1 4y ago
      so when are we arresting engineers who built roads and trucks that were used for money laundering?
      - deleted 4y ago
        [deleted]
      - arlcode 4y ago
        At least 2013 put probably for much longer. https://www.wired.com/2013/03/alfred-anaya/ https://www.wired.com/2013/03/alfred-anaya/
threeseed 4y ago
> I doubt Dutch judges can rule him guilty for money laundering. Sensible position given he isn't actually being charged with money laundering. He is being charged for facilitation and since you're a little sloppy with the facts there will assume that you're not a EU/NL lawyer with expertise in these matters. I know as a layman I will assume that FIOD/Public Prosecutors wouldn't arrest him if they didn't anticipate a successful conviction.

codyb 4y ago

If someone built something that said "Launder your money here" and it took in a bunch of money, and then disbursed it sans fees to hide where it came from... they'd say it was money laundering and arrest the person. Can anyone explain the difference here? Or why anyone is "shocked" that this is happening cause it's crypto? Just seems kinda childish to think crypto's somehow special and not just a tool for moving money around. Do people really think cause it's on the block chain it can evade every law in the world? And cause it's open source nobody's going to pay any attention?

deleted 4y ago
[deleted]
whatisweb3 4y ago
A private key is a 256 bit integer. > If someone built something that said "Launder your [256 bit integers] here" and it took in a bunch of [256 bit integers], and then [encrypted] it sans fees to hide where it came from... they'd say it was [256 bit integer] laundering and arrest the person. When you compare this to encrypting 256 bit integers, text, or E2EE chat protocols, the shock is easier to understand. People should not be treated as a criminal for building Matrix E2EE protocol that enables privacy, they should not be treated as criminal for building Tornado Cash protocol that enables privacy.
- mint2 4y ago
  Okay so you’re saying NFTs are absolutely meaningless, what the holder solely owns is a 256 bit integer and absolutely nothing else? Anyway, in this case unlike debatably with nfts, there is concrete value tied to possessing knowledge of the integer so acting like it’s just sharing random numbers is deceptive and rather easily detected deception. resorting to deceptive arguments generally makes people turn against the position of the one trying to deceive so if advocating for tornado devs, one should avoid that argument unless one is actually trying to make people against them.
  - whatisweb3 4y ago

greatgib 4y ago

It is said that they are prosecuted for:. "environmental crime" Good example again of low profile laws that are abused by government and police forces to get to their objectives.

seanw444 4y ago
Thanks to government bloat. Have less minute laws, have less agents to enforce minute laws, have less funding to hire agents to enforce minute laws.
polytely 4y ago
Read it again, that's not at all what it says. >Public Prosecutor’s Office for serious fraud, environmental crime and asset confiscation. The arrest comes from the department that covers 1. serious fraud, 2. environmental crime, 3. asset confiscation There is nothing in that release that indicates that this arrested was because of environmental crime. You should retract your post.

dcolkitt 4y ago

A lot of the apologists for this are making arguments along the lines of "being decentralized doesn't make you exempt from the rules" or "imagine if a bank laundered this much money". The problem is it doesn't make sense to treat protocols like companies. And it definitely doesn't make sense to treat protocol devs as if they were the executives of those companies. The CEO of a bank and the lead dev of a protocol have very very different powers and responsibilities, and we can't just throw our hands up in the air and say "the law's the law, and you gotta follow it" (even when it's literally impossible given the decentralized and autonomous nature of the protocol). Analogously when joint-stock corporations first entered the scene it required the development of whole new branches of Western law. That law had to be tailored to reflect the realities and nature of joint-stock corporations. What would have been very dumb is simply to pretend like nothing changed and say "same rules apply" and make individual shareholders liable for the action of the corporate entity the same way we're trying to make software devs liable for the action of the decentralized protocol.

mehlmao 4y ago
My understanding is that the developers get a cut of the money that's laundered through tornado.cash
yawnxyz 4y ago
Isn't this kind of like the dev of SMTP getting arrested because two people committed a crime by communicating through email?
- closeparen 4y ago
  Communication providers are not required to obtain licenses and mitigate illegal content in the same way that money service businesses are required to mitigate money laundering. Some people think they should be! I don't agree. But it is a thing governments could do.
- jiggawatts 4y ago
  Or arresting Ron Rivest, Adi Shamir, or Leonard Adleman for helping criminals hide their communications from law enforcement.

from 4y ago

Kind of unrelated but in a lot of ways I feel like an OFAC designation is a bill of attainder that is only legal because it’s used exclusively against foreigners. 1. Designate a businessman as an SDN 2. Wait for them to conduct some transaction that uses dollars or involves any American company in some way (if you know about correspondent banking you know this will almost inevitably happen) 3. Wait for them to travel to country friendly with America 4. Extradite for conspiring to violate IEEPA This has happened before (see US v. Tajideen). It seems like there should be some kind of legal case against this which may happen now given all of the rich Russians that are having their stuff seized on this basis. Edit: And the interesting thing is that the Treasury Department accused Tajideen of being a Hezbollah financier which they could have charged him with when he was extradited from Morocco but they didn’t which to me makes it seem like there wasn’t much of a basis for his designation to begin with.

pharmakom 4y ago

Can anyone explain why Tornado cash dev was arrested but Zcash has been operating for years?

flarex 4y ago
North Korea didn't use them yet to layer stolen funds. Just a matter of time before ZCash and Monero developers are all arrested if this is the precedent.

smashah 4y ago

This whole situation gives crypto more utility/validity. Arresting open source devs for such a simple smart contract? Insane!

ehathaway 4y ago

This isn't just the arrest of a developer expressing his freedom. Its the arrest of a developer who was knowingly part of a group of people who had the intention of deploying code (via smart contracts). The deployment of the code facilitated activities that were claimed to be illegal. The issue isn't owning or writing viruses or malicious code, the issue is distribution and deployment of such code.

matthewdgreen 4y ago
Is distribution of code substantially different from distribution of a book? Does something about uploading code become different when we call it "deployment"? I'm really asking here, because there are some pretty fine lines that need to be drawn.

stalinford 4y ago

You'll never find Satoshi Nakamoto

labrador 4y ago

At least in the US, providing tools that you know will be used to commit a crime is a crime Alfred Anaya Put Secret Compartments in Cars. So the DEA Put Him in Prison https://www.wired.com/2013/03/alfred-anaya/ https://www.wired.com/2013/03/alfred-anaya/

rklaehn 4y ago
There are many non criminal use cases for private electronic transactions - just as there are for cash. So why is it a crime to build a thing that has both legal and illegal applications, like knifes, guns, dollar bills, gold coins, ... ? And don't get me started with "Most activity on tornado is illegal". It is a privacy service. So unless it is broken we don't know this. Are we going to take the word of the "Authorities" for this?
- labrador 4y ago
  I'm not a lawyer, but it seems to me if he can be connected to a single instance of illegal activity on Tornado then he's toast
matteopey 4y ago

deleted 4y ago

[deleted]

wendizo 4y ago

Silver lining: the powers that be tacitly admit that cryptocurrency is money.

yuan43 4y ago

The effect of all of this nonsense will to drive developers into pseudonymity. It won't solve the "problem" of developers building privacy tools. It won't stop experimentation with shitcoins. But it will eliminate the phenomenon of the Buterin-style project lead and "core developer". The bullseye has been painted. And now those who have reaped the benefits of fame will come to know why Satoshi concluded that it was a trap to be avoided. The legal pressure that will be brought to bear on the Ethereum foundation to enact various changes will be enormous and never-ending. It doesn't matter whether or not this case flies. That will take many years to sort out. In the meantime, rational actors will do the rational thing. Everyone else will receive summons and indictments.

deleted 4y ago
[deleted]

deleted 4y ago

[deleted]

xbruteforce 4y ago

Online privacy is at stake for years already. The cypherpunks have said it.

rank0 4y ago

What the fuck. I’m a big time crypto hater but this is absurd. Are we really moving back in this direction? Let’s just ban math because criminals use cryptography.

Rackedup 4y ago

I just don't understand how this is considered money laundering... this is coin laundering and it isn't regulated, as far as I know. The people will still have to explain where the cash comes from when they convert coins to cash?

dimensionc132 4y ago

The problem is that the devs decided to use a Microsoft service (Github) which has its jurisdiction in the US of A. If only they had used Codeberg, this would not have been an issue at all, as Codeberg is self hosted and a free hosted version is in Germany.

Arnt 4y ago

So a software developer is held responsible for the software. If the software is largely SaaS, then I can see the sense in that. A software developer of SaaS is also a service developer, arguably even a service operator although that depends on how the service is developed and operated. I'm sure the judge will be thrilled to have to listen to arguments about the with the nuances of dev, ops, devops and a distributed platform such as that which executes Ethereum's smart contracts.

2OEH8eoCRo0 4y ago
Being arrested is not that big of a deal- it merely means they suspect that you committed a crime and want to question you. I would also wait and see what they are accused of, maybe there is more to it than simply contributing to an open source project.
- rascul 4y ago
  It can easily turn into a big deal if the arrest means you're locked in a cell for awhile.
  - 2OEH8eoCRo0 4y ago
    What is the alternative?
    - rascul 4y ago
      I guess the alternative is to not be arrested and locked in a cell? That's kind of up to someone else.
    - throwaway0a5e 4y ago
      Summons the person to court and only issue an arrest warrant if they fail to appear. This is SOP for the bulk of nonviolent crimes in the US.
- retcore 4y ago
  In the UK arrest is lawful simply to ensure that your statement or interview can be obtained, entirely without any kind of suspicion. Still will disqualify you for automatic entry in the US however.

paulsutter 4y ago

There’s a big legal distinction whether the developers are collecting fees from operation of the service, since that’s very different from merely developing open source software. I’m curious how this develops > It is suspected that persons behind this organisation have made large-scale profits from these transactions.

rvnx 4y ago
Exactly like original of developers of Bitcoin, it's not because they are not running the nodes themselves that they are not benefiting from facilitating ponzi or money laundering. Nodes are running the network, and developers earn through increased coin value and both are necessary part of the operations of the service.
- Anunayj 4y ago
  Yup exactly, the mistake these guys did here is, instead of creating a token that you have to buy to use the service, then giving yourself 50% of the token supply, and having 50 of your keys control a "DAO" for governance, they decided to flatly price.
  - paulsutter 4y ago
    You've inadvertently explained why a transparent ruse like that wouldn't work. If you want to develop serious privacy technology, make it open source and don't benefit from it financially
    - Anunayj 4y ago
      Oh that was sarcasm directed at the state of cryptocurrencies today :P
- deleted 4y ago
  [deleted]
- paulsutter 4y ago
  Coders logic != legal system

ucha 4y ago

This makes so little sense to me. I don't know how much information is made public by the Dutch justice system but I would really like to see an affidavit or something like it to understand what specific charges are levied against that developer.

tgv 4y ago
Once the trial starts, certainly journalists should be able to read all of it, unless the court decides some of it is too sensitive. The verdict will be published at rechtspraak.nl.
- seanw444 4y ago
  A trial that has far-reaching effects on the populous, being hidden from the populous. That would be entirely unsurprising.

aljsuhbydnhd 4y ago

throwaway4good 4y ago

This sentence provides a hint of what is going on: "Since Monday 8 August 2022 Tornado Cash has been placed by the US government on the OFAC sanctions list of America."

threeseed 4y ago
"In June 2022 the het Financial Advanced Cyber Team (FACT) of the FIOD started an criminal investigation against Tornado Cash" And the article is from 12 August. So NL would have informed US who then put them on a sanctions list.

Tepix 4y ago

Wow, just wow. Am i alone in thinking this is not going to fly if all he did was write some software that helps with your financial anonymity? There must be more. Perhaps he also deployed it? That would be a different story. The article is quite murky in that regard. Perhaps they don't know yet. In there is an interesting paragraph explaining what Tornado Cash is: … The (criminal) origin of the cryptocurrencies is often not or hardly checked by such mixing services. Users of a mixing service mostly do this to increase their anonymity. Note how they sneaked "criminal" in there. There are of course legitimate reasons to desire anonymity for financial transactions! It's one of the reasons people like to pay cash. Satoshi Nakamoto is wise to remain anonymous.

pie_flavor 4y ago
An American could be excused for thinking it is not going to fly if all he did was write some software that helps with your financial anonymity. Unfortunately much of the world does not operate under American law.
parasense 4y ago
> The (criminal) origin of the cryptocurrencies is often not or hardly checked by such mixing services. Even omitting the "criminal" implication, that sentence has a big problems. > The origin of the cryptocurrencies is often not or hardly checked by such mixing services. Let me rephrase that: > The origin of cryptocurrencies is not checked by cryptocurrencies services. The idea is ridiculous at face value. However, it does illustrate the best & worst part of blockchains -- everything goes on the blockchain. The government loves that audit trail. But how is an ordinary person to know some wallet addr is a pedophile, or terrorist, or druglord, or whatever? I mean that as an honest question. Is there some public crypto-wallet watch-list everyone is supposed to be referencing prior to doing p2p transactions? Like you, I wonder how this person could be prosecuted? In the free-world, writing software is considered free-speech, at least in the USA, but I'm not sure in the Netherlands or wherever this person was apprehended? There are of course exceptions... like writing malware or viruses, etc.. So like you, the situation seems to entail something more.. like perhaps running an operation with clearly articulate facts indicating criminal activity. You know, the old saying goes "it's what you know, and when you knew it". So like, if the person was aware of criminal activity, taking part in criminal activity, etc.. I suppose an argument could be made.

deleted 4y ago

[deleted]

lizardactivist 4y ago

Sad to see the EU bow down to the criminal racket that is the US financial system. Even if this developer is not extradited, the US has again succeeded in maintaining the culture of fear, where they can get their slimy hands on anyone anywhere for any reason they want.

jacooper 4y ago
> Sad to see the EU bow down to the criminal racket that is the US financial system. The EU in general is extremely hypocritical when it comes to privacy, its probably an opportunity to crack down on crypto while it's down. You see all the laws that aim to put a stop to big tech, and rightly so because their government won't do anything. In the same time, when privacy protections are against the EU itself, it suddenly doesn't work, or it needs monitoring like their horrible attempt using the chat control law, which even faces backlash from inside, like from Germany.
omginternets 4y ago
Where did you see that this was connected to the US financial system? They mention in passing that the US has sanctioned Tornado Cash, but I didn't get the impression that this was the reason why this person was arrested.
- diogenes1 4y ago
  there have been multiple coordinated attacks being made, it's quite naiive to assume US is not involved here
  - omginternets 4y ago
    I'm very open to the idea that they are. I'm asking whether there's evidence.
potatototoo99 4y ago
I don't think it is related. Maybe just the increased publicity quickened the arrest, but I don't see any hope of extradition of a Dutch national to the US for sanction violations announced just a few days prior.

clippablematt 4y ago

Ah yes, arrest developers of open source privacy code and blame them for North Korea money laundering rather than going after the people actually committing crimes. Sounds about right. Privacy is not a crime, it’s a human right! Sorry that it makes the polices job harder, but our rights are more important. And didn’t we go through all this already in the 90s? Are we now gonna start arresting all cryptographers? This is because they don’t like money that is independent from state control. They hate the idea of bitcoin and eth not being $ or €. The large majority of money laundering happens through banks, who just pay a fine and sweep it under the rug.

desindol 4y ago
Privacy is a human right? citation needed.
- josu 4y ago
  Universal Declaration of Human Rights: >Article 12 >No one shall be subjected to arbitrary interference with his privacy, family, home or correspondence, nor to attacks upon his honour and reputation. Everyone has the right to the protection of the law against such interference or attacks.
  - jasonlotito 4y ago
    That allows for interference with someones privacy. Basically, interference of privacy based on reason or system is allowed. It does give you the right to not be subjected to interference of your privacy from random choice or personal whim is not. According to the article, that right has not been broken. Moreover, you do not have a right to privacy. Rather, you have a the right to not have your privacy arbitrarily interfered with. This is a pretty important distinction.
- implements 4y ago
  (From Wikipedia) The Fourth Amendment to the Constitution of the United States ensures that "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." (Also) Article 12 of the Universal Declaration of Human Rights states: No one shall be subjected to arbitrary interference with his privacy, family, home or correspondence, nor to attacks upon his honour and reputation. Everyone has the right to the protection of the law against such interference or attacks. It’s generally understood that without privacy people are effectively disenfranchised politically, because any expression of an contentious opinion or association with subversive or dissident thinkers becomes potentially so harmful that wise people would avoid both and keep almost entirely to themselves or family.

dangerface 4y ago

I understand why they arrested him but it doesn't seem like he did anything thats illegal so it will be interesting to see what charge they bring or how they intend to differentiate between tornado cash and HSBC laundering money for cartels.

jsmith45 4y ago
He created and presumably deployed a service that facilitates illegal money laundering. From what I have heard approximately 20% of the volume is of coins are known to come from crime. That far exceeds the threshold for which an organization must take steps to try to prevent these things. It might not have been possible change the existing deployed contracts, or to shut the service down entirely (I’m not actually sure what governance features if any the core contracts have), but there are things that could have been done nevertheless, like shutting down the website that provided a convenient front end. Basically, unless he can show that he genuinely did not know that the service was laundering illegal funds on a large scale, or that he did everything in his power to stop this use, he is probably screwed. This is especially true if he profits in any way from the operation of TC, like if he was operating any relay nodes that took a fee for funding anonymous withdrawals.
- dannyw 4y ago
  The frontend started blocking OFAC-sanctioned addresses earlier this year. Do you think this logic should also apply to encrypted messaging apps? If you're a contributor to Matrix, or another open source FOSS tool, and you hear reports that criminals are using it (because criminals are a subset of the human population), should you be legally required to take all steps to backdoor it?
  - jsmith45 4y ago
    If you are aware that your app is being very disproportionately used to facilitate criminal transactions, you would generally be required to take steps to try to prevent or discourage such usage. This is especially true if you are profiting from your app (as the governments think the tornado cash developers were). This does not necessarily mean backdooring the app. Remember how Kim DotCom went down for operating MegaUpload while actively knowing that one of the bigger usages of the site was piracy, and not doing enough to discourage or prevent such use? The concept here is not all that different. This is why I would never contribute to some open source projects like metasploit that come too close to falling on the wrong side of the line.

louwrentius 4y ago

He wasn’t just developing software, he seems to also been involved with operating the Tornado mixer service, thus enabling / facilitating money laundering and evasion of sanctions.

yokem55 4y ago
The 'service' is a contract on the chain. It exists and operates because thousands of other people are running nodes that run that chain. It still works today if you access the static front end website via ipfs or have a local clone of it or manually build and submit the transactions via your own local node. So, once deployed, there really isn't anything to 'run' in order for it to continue.
- louwrentius 4y ago
  > thousands of other people are running nodes that run that chain Then thousands of people - including him - enable tax evasion and sanctions. Thank you for providing a good example why all crypto should be banned. And yes you can ban cryptocurrencies by outlawing exchanges.
dylkil 4y ago
tornado cash doesnt facilitate money laundering, it just obfuscates the source of eth, like converting debit into cash, those funds still need to enter the real system in some "legitimate" manner in order to be considered laundered.
- louwrentius 4y ago
  Any kind of mixer is intended to anonymise transactions and that doesn't really have any legitimate, legal use case. Que remarks about 'privacy' in 3,2,1...
  - Eduard 4y ago
    GDPR
  - 4y ago

deleted 4y ago

[deleted]

Andrew_nenakhov 4y ago

A message is circulating in russian crypto groups, that two more developers were arrested: Roman Panchenko in Seattle, and Nikita Dementyev in Tallinn. (I can't verify the veracity of this report, but if true, this looks like it was a coordinated international police operation)

dutchbrit 4y ago
Roman Panchenko, interesting.. he also lives in Amsterdam according to LinkedIn. Also, both the names you mention, their Instagrams have both been taken offline.

fleddr 4y ago

How many people listed in the Panama papers have been arrested? Their assets seized? Fines? Zero. London's "the city" is pretty much one giant laundering operation for Saudi and Russian dirty money. Money laundering, monetary privacy, wealth obfuscation is perfectly fine. It only becomes an issue when it becomes accessible to us simple minded folks too. The urgency to stop this tech really tells the tale. Or in other words, laundering "doesn't scale".

joe_the_user 4y ago
Sure, I've even heard speculation that the leak of the various money-laundering documents involve an effort to monopolize laundering to a even small group. That's as maybe but no kind of money laundering should have our sympathy. Most money laundering does damage - the kind that isn't for directly illegal activities often involves local corrupt exploiting their control of local resources (Iran, a major oil producer, burning 4% it's oil for bitcoins to escape sanctions, for example).
tokai 4y ago
Did you look it up or are you just spouting what ever you can dream up to fit your argument? Lots of people all over the world have been arrested based on the panama papers.
- 5350-uiop-1130 4y ago
  pretty sure the only people who suffered where the execs running the company, losing their yearly bonus,...and only because they embarrassed their overlords. "In March 2018, Mossack Fonseca announced that it would cease operations at the end of March due to "irreversible damage" to their image as a direct result of the Panama Papers"
  - Kbelicius 4y ago
    "In October 2020, German authorities issued an international arrest warrant for the two founders of the law firm at the core of the tax evasion scandal exposed by the Panama Papers. Cologne prosecutors are seeking German-born Jürgen Mossack and Panamanian Ramón Fonseca on charges of accessory to tax evasion and forming a criminal organization"

pxeger1 4y ago

If I create a new type of leather wallet and then North Korea uses it for money laundering, can I be charged for "facilitation"? What about if I discovered electricity, which lead to money laundering? Where is the line here, and who defines it?

jeroenhd 4y ago
If you take part in production, delivery, sales, or distribution of said in North Korea: yes. If you provide North Korea with designs of technology restricted by sanctions: yes. If at least one seventh of all electricity you generate is used for criminals: yes. The line is defined by governments, law enforcement, and the courts. The judge may dismiss all charges if they see fit, and the government can add or remove legislature to criminalize or decriminalize certain behaviour within the bounds of constitutions and international treaties.
PeterisP 4y ago
The key line is intent. If you create a new type of leather wallet that just happens to be used for money laundering, that is not a crime. If you create a new type of leather wallet specifically designed with the goal so that it's easier to smuggle stuff, you can and should be charged for aiding and abetting if they can convince the jury that you did this knowingly with this intent. If you do the latter and simply want to claim that it just so happened without your intent, well, the courts are there to resolve this dispute, but it can go both ways - especially as soon as there's teamwork and some record of communications, there's often evidence to support or contradict claims of intent. Like, if you made tests where you run your new wallet through various popular models of airport scanning machines testing whether they succeed at detecting something hidden, and advertise the specific airports which do/don't detect it, that would be some evidence about your likely intent.
tgv 4y ago
The people who write viruses/trojans/RATs/malware, are they just making a product? What if they sell it?
Rackedup 4y ago
I think that they are doing this purely to hurt crypto. They keep adding new laws when they see an opportunity where crypto could become more useful... it's like a frog in a warming pot.

whatisweb3 4y ago

My comment from 2 days ago: > 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. Discussion: https://news.ycombinator.com/item?id=32404966 https://news.ycombinator.com/item?id=32404966

JumpCrisscross 4y ago
> US sanctioning Tornado Cash Zero evidence this is connected to U.S. sanctions. Dutch law protects even cash transactions less than American law. When the investigation started, in June, the U.S. had already released evidence Tornado Cash was used to launder money. If a Dutch person kept working on it, it might be trivial to show they broke Dutch criminal statute.
- mr_beans 4y ago
  The NL government org that arrested him specifically mentions the US sanctions in their press release https://www.fiod.nl/arrest-of-suspected-developer-of-tornado-cash/ https://www.fiod.nl/arrest-of-suspected-developer-of-tornado...
  - JumpCrisscross 4y ago
    > org that arrested him specifically mentions the US sanctions in their press release I'm not arguing it's irrelevant. Just that this doesn't look like a sanctions arrest. Tornado Cash was sanctioned on 8 August. There hasn't been enough time for someone to violate the sanctions and produce enough evidence to get arrested. More likely: the same alleged crimes that got Tornado sanctioned prompted this arrest.

diogenes1 4y ago

one of the most shameful moments in digital human rights after the arrest of pgp creator in 1993. Code is speech, it is not a weapon. Banning maths is fascist

jeroenhd 4y ago
You can call it money laundering speech if you want, but that doesn't change the fact money laundering is illegal. Selling skimming services is illegal even if you don't skim people yourself. Nobody is banning technology or math, only specific, usually criminal, uses of technology and math are banned.
tzs 4y ago
> Banning maths is fascist What about banning chemistry and physics? If I fire a gun and the bullet hits someone I get arrested (and maybe even if it doesn't hit anyone if I am somewhere were shooting guns is not illegal), yet all I did was use some levers (physics) to add compress a spring adding potential energy to it (physics) which then got converted to kinetic energy (Hooke's law, more physics), which imparted energy to some chemicals starting a reaction (chemistry) that produced expanding gases that caused the bullet to rapidly leave the barrel of the gun, where it followed a ballistic trajectory (physics). Or what about banning biology? Look closely at other animals sometimes. Things that in humans we'd call rape and murder and robbery are quite common. Millions of years of evolution have selected for animals that do those things. Humans too have the same propensity to do many of those same things, and would do so more often if they were not illegal. Just look at what happens when people find themselves in situations where those laws do not apply or where they have no chance of being punished, such as when a country successfully invades another country.
- diogenes1 4y ago
  you fired the gun, not the manufacturer. why would they arrest the manufacturer/inventor/etc for something that was done by you?
  - arlcode 4y ago

nootropicat 4y ago

Governments started the offensive. Now decentralization actually starts to matter. Ethereum is switching to PoS at the last minute, PoW miners are very easily forced to enforce sanctions because they can't hide due to enormous physical and legal presence. Home stakers can easily hide and break the law.

dannyw 4y ago
Decentralization really is starting to matter. It's a wake up call for a lot of developers in this space, that pragmatic shortcuts (e.g. centralized RPCs, centralized stablecoins like USDC) have disadvantages that may no longer outweigh the advantages.
- diogenes1 4y ago
  true. none of smart contract blockchains today are actually a practical tool till lightclients that run on smartphones are mainstream
  - codehalo 4y ago
    The problem is that Apple and Google have a kill switch.
    - yokem55 4y ago
      The light clients that the parent envisions could potentially run entirely in javascript within a browser. No app store needed unless the browser engines start blacklisting bits of js.
      - boppo1 4y ago
        Doesn't that leave them WIDE open to malicious code?
  - nootropicat 4y ago
    I don't think they are going to ever be mainstream. Even a lightnode that only downloads headers is going to eat up battery fast. If a centralized service works for you, what's the point? What's necessary is to allow actually persecuted people to run nodes on their computers.

dannyw 4y ago

For those who think this is good: Private keys can be represented in text. Like this: KwTHJw865SLeTAjK7otYb5bL5mwutBb2vDxxF7kGf5XvY7QttnvM Encrypted messaging apps like Matrix or Signal, can be used to send strings with private keys, anonymously. It's very difficult to hold a position that financial privacy tools are bad, but encrypted messaging apps are good; because they are really not that different.

jeroenhd 4y ago
Messenger application are not (yet :( ) required to comply with anti money laundering regulations. Financial systems do. The two are not the same.
cortesoft 4y ago
You are thinking like a computer programmer and not a lawyer. There is a classic article that demonstrates the difference called “What colour are your bits?” https://ansuz.sooke.bc.ca/entry/23 https://ansuz.sooke.bc.ca/entry/23 The law isn’t actually talking about math or numbers or encryption, even though it seems like it is to computer programmers. The math doesn’t matter to the law, what you use it for does.
lottin 4y ago
I don't find it difficult.
- bsima 4y ago
  Please elaborate
  - lottin 4y ago
    The fact that two actions are achieved by similar (or the same) means doesn't make those actions ethically equivalent.
catchclose8919 4y ago
Ppl work hard to make sure they remain different for 99.9% of non-technical people (eg. banning anonimous cryptocurrency)... once this is done, you become and outlier by using different tools than average people, and special means of surveilance can be deployed against you personally at much lower cost... Ofc this is bad, but the bigger purpose is always "power over the proles". You can let most people have most of their privacy as long as you don't touch the "power distrubution tools" (money) - eg. if messaging is private, but money is on a blockchain where all wallets are mandatory to have an associated human identity, it doesn't matter that some sketchy transactions happen on the edges. Bitcoin would be targeted too if it were used to eg. pay wages and fund companies on a large scale. Probably Tornado Cash enabled some activity that was large scale enough to not be considered just "on the fringes" anymore...

jeroenhd 4y ago

This is an interesting case because it's applying financial law to a decentralised cryptocurrency operation. If research shows that Tornado was indeed processing a billion dollars of criminal funds then I'm not surprised arrests have been made even though it may be hard to prove actual involvement by the network operators. These numbers come close to the fund processing capacity of a small financial institution and there are The points about DAOs are also interesting. DAOs have no central authority or elected leadership. Setting up a DAO should not be enough to get out of legal responsibilities of running a financial institution, but people voting in DAOs also shouldn't be treated like CEOs because they have very little actual power. Conviction in this case might have a serious impact on decentralized crypto schemes. DAOs are a great technical workaround for not having a direct kind of leadership but the real world doesn't care about fancy technical solutions. Someone sets up a certain system and that someone has the responsibilities that come with setting up such system. If that service a free website, the responsibilities are extremely limited; if that service is a financial institution, your responsibilities become more serious. Re: "this is just a dev", the dev also presumably ran the software they created, and with a seventh of the processed volume being criminal funds, it's almost sure that they operated on dirty funds at some point. Even if the developer's role in the (suspected criminal) DAO is considered insignificant, this might make the dev a money mule as he temporarily stored stolen funds in their crypto wallet. According to Dutch law, money mules may be prosecuted as complicit with fraud and any other financial crimes that take place. One might defend the cryptocurrency operators by claiming that they can't verify the identities of their customers to comply with money laundering regulations, but that only underlines the illegality of the system: if your system isn't capable of complying with the law, you shouldn't operate such a system. It's like claiming you don't need seat belts in your cars because you can't figure out how seat belts work: your lack of control or creativity is not society's problem. With how overloaded the courts are, it'll take months or even years to see the impact of this arrest. Whatever the outcome, it'll have a big impact.

markisus 4y ago
The dev doesn't operate the TornadoCash contract. The code is actually run by people who operate ethereum nodes. After the initial deployment, the dev has zero involvement.