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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 laun

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.
  - diogenes1 4y ago
    this right here, is the crux of the argument
    - vorpalhex 4y ago
      If they were getting a cut from whenever illegal activities were done.. maybe.
      - WFHRenaissance 4y ago
        You do know RSA is a company too, right? What are the odds that RSA SecurID has been used by bad actors before? https://en.wikipedia.org/wiki/RSA_Security https://en.wikipedia.org/wiki/RSA_Security
  - closeparen 4y ago
    The difference is lawmakers have regulated money service businesses and have not regulated cryptography. If they had regulated cryptography, then yes making RSA available to the public could be a crime.
- probably_wrong 4y ago
  In my opinion, this (very popular!) line of reasoning is missing the forest for the trees. A knife is widely regarded as a tool that's legal to own and that, save a few precautions, you can carry with you. Switchblades, despite being also knives, are widely considered dangerous and their sale and possession is overall restricted (presumably) due to a strong correlation between the presence of a switchblade and stabbings. Just because SMTP and Tornado are protocols it doesn't mean they are the same - one is a protocol enabling a wide range of activities (some of them criminal, some not) while the other is literally designed to hide the origin of money, an activity that most governments frown upon.
  - akimball 4y ago
    That presumption would be incorrect
beeboop 4y ago
Let's be clear - this isn't money laundering. Money laundering is taking illicit funds and making them look legitimately sourced. Tornado Cash does not do this, it is clear that the source is Tornado Cash, and it does nothing to legitimize funds. To spend crypto you still most likely need to convert it to fiat and that fiat money will still be under scrutiny for its source.
- dylkil 4y ago
  Exactly, everyone is missing this. If anything using tornado cash is analogous to converting debit into cash.
- DangerousPie 4y ago
  It's maybe not making them look "legitimate" but it's definitely making some funds look a lot less illicit than they are.
- droopyEyelids 4y ago
  It absolutely is money laundering- which has three phases. Placement, Layering, and Integration. The Layering phase is when the original source of money is concealed through transactions or bookkeeping tricks. https://www.investopedia.com/terms/m/moneylaundering.asp https://www.investopedia.com/terms/m/moneylaundering.asp
  - dereg 4y ago
    Do you believe that financial or transactional privacy should be illegal? Obfuscation is used for many things not exclusive to money laundering.
  - beeboop 4y ago
    "Placement surreptitiously injects the “dirty money” into the legitimate financial system." Tornado Cash doesn't move the funds between financial systems at all "Layering conceals the source of the money through a series of transactions and bookkeeping tricks" The source of the coins is in plain sight - it's clearly from Tornado Cash, and when converted into fiat currency the source is very likely also obvious (some exchange) unless you do some in-person exchange of cash for coins, in which case this has nothing to do with Tornado Cash "Integration, the now-laundered money is withdrawn from the legitimate account to be used for whatever purposes the criminals have in mind for it" Again there's no legitimacy for the coins after going through Tornado Cash and the fiat currency is still under scrutiny.
colechristensen 4y ago
Starting a money laundrymat and expecting not to get charged with a crime is a bit absurd. Pretending that it's totally fine because it's "privacy" not money laundering because crypto is special... is likewise absurd.
- KyleJune 4y ago
  I agree, it's like saying the developer of ransomware shouldn't get in trouble for making it if they just made it public instead of using it themselves. The fact that ransomware could be used for legal purposes(pen testing maybe?) isn't really a defense when you make it easily accessible to criminals by making it public.
  - pitaj 4y ago
    > it's like saying the developer of ransomware shouldn't get in trouble for making it if they just made it public instead of using it themselves They really shouldn't. Neither should any other security researcher who publishes exploits. Neither should any other developer of cryptographic technology.
    - KyleJune 4y ago
      I think there is a difference between identifying an exploit exists and making a tool that makes it easy for anyone to exploit. I think if you are releasing a tool to act on security vulnerabilities it should be done so very carefully so that it can't be easily used to commit crime.
    - colinmhayes 4y ago
      Big difference between writing a report on a vulnerability and writing malware that exploits it.
      - pksebben 4y ago
        is there? what's the difference?
3np 4y ago
There also seems to be a lot of conjecture all over here. We know that the person arrested "is suspected of involvement in concealing criminal financial flows and facilitating money laundering through the mixing of cryptocurrencies through the decentralised Ethereum mixing service Tornado Cash." The general interpretation is that they were arrested for development of the protocol and software. It may be that they have them on the hook for other actions, such as assisting particular individuals or directly handling funds. Let's see what comes out of this. We don't yet know which specific acts they are suspected of.
joe_the_user 4y ago
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. If the state can arrest people and cause activity to stop, it makes sense in the way states think. The approach of bitcoin and crypto process in general hasn't been to ask permission but aim for a protocol that states can't stop. Neither governments nor "society" "signed off" on crypto. People just started doing it with the principle "this is too distributed to stop". Well, if states can stop it, that approach failed, right? Analogously when joint-stock corporations first entered the scene it required the development of whole new branches of Western law. Limited-liability enterprises still aren't very popular. But these were legitimized by courts and legislation based on them provide (alleged) benefits. Crypto generally hasn't been legitimized by society, crypto advocates often act like they don't need such legitimization and by that token, the state has no obligation not to treat crypto activities as being within it's existing categories - especially it this work: they don't like money laundering and fraud through crypto and hey, a lot of people going to jail.
- jobs_throwaway 4y ago
  >If the state can arrest people and cause activity to stop We shall see if that's the case here. My guess is the state can't stop it
  - joe_the_user 4y ago
    States can certainly control the behavior of ordinary businesses that operate in their borders. Maybe they can't directly stop some hacker somewhere from operating a mixer but if coins from a mixer are as illegal as coins from some crime, these businesses won't want to touch. I mean, the FBI has already shown it can see through mixers and arrest those who try to cash stolen bitcoins. China has made sale or possession of bitcoin a crime but the West is following different road - with enough state intervention, bitcoin will wind-up a public money, less private money system than regular bank accounts. Every transaction is on the blockchain and that is public. Try putting that in your "anarcho-capitalist" pipe and smoking it.

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.
- diogenes1 4y ago
  this right here, is the crux of the argument
  - vorpalhex 4y ago
    If they were getting a cut from whenever illegal activities were done.. maybe.
    - WFHRenaissance 4y ago
      You do know RSA is a company too, right? What are the odds that RSA SecurID has been used by bad actors before? https://en.wikipedia.org/wiki/RSA_Security https://en.wikipedia.org/wiki/RSA_Security
- closeparen 4y ago
  The difference is lawmakers have regulated money service businesses and have not regulated cryptography. If they had regulated cryptography, then yes making RSA available to the public could be a crime.
probably_wrong 4y ago
In my opinion, this (very popular!) line of reasoning is missing the forest for the trees. A knife is widely regarded as a tool that's legal to own and that, save a few precautions, you can carry with you. Switchblades, despite being also knives, are widely considered dangerous and their sale and possession is overall restricted (presumably) due to a strong correlation between the presence of a switchblade and stabbings. Just because SMTP and Tornado are protocols it doesn't mean they are the same - one is a protocol enabling a wide range of activities (some of them criminal, some not) while the other is literally designed to hide the origin of money, an activity that most governments frown upon.
- akimball 4y ago
  That presumption would be incorrect

beeboop 4y ago

Let's be clear - this isn't money laundering. Money laundering is taking illicit funds and making them look legitimately sourced. Tornado Cash does not do this, it is clear that the source is Tornado Cash, and it does nothing to legitimize funds. To spend crypto you still most likely need to convert it to fiat and that fiat money will still be under scrutiny for its source.

dylkil 4y ago
Exactly, everyone is missing this. If anything using tornado cash is analogous to converting debit into cash.
DangerousPie 4y ago
It's maybe not making them look "legitimate" but it's definitely making some funds look a lot less illicit than they are.
droopyEyelids 4y ago
It absolutely is money laundering- which has three phases. Placement, Layering, and Integration. The Layering phase is when the original source of money is concealed through transactions or bookkeeping tricks. https://www.investopedia.com/terms/m/moneylaundering.asp https://www.investopedia.com/terms/m/moneylaundering.asp
- dereg 4y ago
  Do you believe that financial or transactional privacy should be illegal? Obfuscation is used for many things not exclusive to money laundering.
- beeboop 4y ago
  "Placement surreptitiously injects the “dirty money” into the legitimate financial system." Tornado Cash doesn't move the funds between financial systems at all "Layering conceals the source of the money through a series of transactions and bookkeeping tricks" The source of the coins is in plain sight - it's clearly from Tornado Cash, and when converted into fiat currency the source is very likely also obvious (some exchange) unless you do some in-person exchange of cash for coins, in which case this has nothing to do with Tornado Cash "Integration, the now-laundered money is withdrawn from the legitimate account to be used for whatever purposes the criminals have in mind for it" Again there's no legitimacy for the coins after going through Tornado Cash and the fiat currency is still under scrutiny.

colechristensen 4y ago

Starting a money laundrymat and expecting not to get charged with a crime is a bit absurd. Pretending that it's totally fine because it's "privacy" not money laundering because crypto is special... is likewise absurd.

KyleJune 4y ago
I agree, it's like saying the developer of ransomware shouldn't get in trouble for making it if they just made it public instead of using it themselves. The fact that ransomware could be used for legal purposes(pen testing maybe?) isn't really a defense when you make it easily accessible to criminals by making it public.
- pitaj 4y ago
  > it's like saying the developer of ransomware shouldn't get in trouble for making it if they just made it public instead of using it themselves They really shouldn't. Neither should any other security researcher who publishes exploits. Neither should any other developer of cryptographic technology.
  - KyleJune 4y ago
    I think there is a difference between identifying an exploit exists and making a tool that makes it easy for anyone to exploit. I think if you are releasing a tool to act on security vulnerabilities it should be done so very carefully so that it can't be easily used to commit crime.
  - colinmhayes 4y ago
    Big difference between writing a report on a vulnerability and writing malware that exploits it.
    - pksebben 4y ago
      is there? what's the difference?

3np 4y ago

There also seems to be a lot of conjecture all over here. We know that the person arrested "is suspected of involvement in concealing criminal financial flows and facilitating money laundering through the mixing of cryptocurrencies through the decentralised Ethereum mixing service Tornado Cash." The general interpretation is that they were arrested for development of the protocol and software. It may be that they have them on the hook for other actions, such as assisting particular individuals or directly handling funds. Let's see what comes out of this. We don't yet know which specific acts they are suspected of.

joe_the_user 4y ago

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. If the state can arrest people and cause activity to stop, it makes sense in the way states think. The approach of bitcoin and crypto process in general hasn't been to ask permission but aim for a protocol that states can't stop. Neither governments nor "society" "signed off" on crypto. People just started doing it with the principle "this is too distributed to stop". Well, if states can stop it, that approach failed, right? Analogously when joint-stock corporations first entered the scene it required the development of whole new branches of Western law. Limited-liability enterprises still aren't very popular. But these were legitimized by courts and legislation based on them provide (alleged) benefits. Crypto generally hasn't been legitimized by society, crypto advocates often act like they don't need such legitimization and by that token, the state has no obligation not to treat crypto activities as being within it's existing categories - especially it this work: they don't like money laundering and fraud through crypto and hey, a lot of people going to jail.

jobs_throwaway 4y ago
>If the state can arrest people and cause activity to stop We shall see if that's the case here. My guess is the state can't stop it
- joe_the_user 4y ago
  States can certainly control the behavior of ordinary businesses that operate in their borders. Maybe they can't directly stop some hacker somewhere from operating a mixer but if coins from a mixer are as illegal as coins from some crime, these businesses won't want to touch. I mean, the FBI has already shown it can see through mixers and arrest those who try to cash stolen bitcoins. China has made sale or possession of bitcoin a crime but the West is following different road - with enough state intervention, bitcoin will wind-up a public money, less private money system than regular bank accounts. Every transaction is on the blockchain and that is public. Try putting that in your "anarcho-capitalist" pipe and smoking it.