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> Mixers (or "tumblers") work by collecting up a bunch of deposits, which get coalesced into larger chunks over a random period of time, then doling out portion

> Mixers (or "tumblers") work by collecting up a bunch of deposits, which get coalesced into larger chunks over a random period of time, then doling out portions of that chunk as withdrawals at a later time. Naturally, a percentage of the deposits (1-3% normally) typically stay with the service as profit. Actually I think the v1 contracts did not require or accept a fee for usage. I'm not sure about their v2 contracts which incorporated some sort of governance token called TORN.

carlosdp 4y ago
They also don't take a fee for usage. The component that takes a fee is the Relay network, which simply forwards withdrawals to wallets that don't yet have any currency (and therefore cannot pay the transaction cost of withdrawal itself), and take small fee for the service. They're just gas forwarders, not anything really special to Tornado Cash's function. But you can use the Tornado Cash pools themselves without the relayers.
ruuda 4y ago
There is another omission: > Because the deposits and withdrawals are not synchronized in time, users can break the link between a particular chunk of cryptocurrency and their holdings. This is not false, but a bit misleading. Being decorrelated in time helps against analysis that tries to match inputs and outputs, but it's not what breaks the link. On withdraw, how does the service know that the user has a claim to the funds? A centralized service can store this in a database off-chain, but Tornado is permissionless, there is no third party database, only the smart contract. If you would store it naively on-chain, the link would be public, defeating the purpose. So instead, Tornado uses zero-knowledge proofs that allow users to prove that they have a claim to the funds, but nothing more than that. Crypto (in the original meaning of the word) is what breaks the link!
killingtime74 4y ago
Is this Relevant for whether they broke the law?
- TAKEMYMONEY 4y ago
  For fun: were the developers making the software to knowingly profit off of criminal behavior, and to what degree? Can someone smarter than me talk about how we might judge the mens rea and criminal intent of the developers?
  - etchalon 4y ago
    We can't really judge it without evidence, which is likely what authorities are trying to gather.
    - TAKEMYMONEY 4y ago
      Couldn't we argue that the devs reasonably knew it was being used for money laundering? It got a light shined on it during the investigation of the crypto.com hack. If so, they knew they were profiting off of it, right? [1] Tornado Cash also did not comply with the OFAC list of known sanctioned wallets. However, it's clearly not that simple, from the article: > "If Tornado Cash knows who deposited the money and who took it out, that’s not money laundering." > "Smart contracts are not legal contracts." > "Every service provider has a certain amount of illicit activity." https://www.coindesk.com/business/2022/01/21/is-tornado-cash-complicit-in-laundering-stolen-crypto-its-complicated-says-former-law-enforcement-agent/ https://www.coindesk.com/business/2022/01/21/is-tornado-cash...
      - notch656a 4y ago
        So what if they profited off money laundering, and knew it? The guy on the interstate road crew knows damn well the road is used for money laundering, and he builds it anyway and happily deposits his paycheck without taking the slightest effort to impede the launderers.
        acdha 4y ago
        His paycheck comes from the state, not the mobsters. There’s a big difference between building something which criminals can misuse and being paid by someone with no connection to the criminals compared to building something which is designed for criminal activity and directly receiving payment from them. The Dutch release sounds like they intend to prove that, which is a pretty significant distinction if they can back it up.

carlosdp 4y ago

They also don't take a fee for usage. The component that takes a fee is the Relay network, which simply forwards withdrawals to wallets that don't yet have any currency (and therefore cannot pay the transaction cost of withdrawal itself), and take small fee for the service. They're just gas forwarders, not anything really special to Tornado Cash's function. But you can use the Tornado Cash pools themselves without the relayers.

ruuda 4y ago

There is another omission: > Because the deposits and withdrawals are not synchronized in time, users can break the link between a particular chunk of cryptocurrency and their holdings. This is not false, but a bit misleading. Being decorrelated in time helps against analysis that tries to match inputs and outputs, but it's not what breaks the link. On withdraw, how does the service know that the user has a claim to the funds? A centralized service can store this in a database off-chain, but Tornado is permissionless, there is no third party database, only the smart contract. If you would store it naively on-chain, the link would be public, defeating the purpose. So instead, Tornado uses zero-knowledge proofs that allow users to prove that they have a claim to the funds, but nothing more than that. Crypto (in the original meaning of the word) is what breaks the link!

killingtime74 4y ago

Is this Relevant for whether they broke the law?

TAKEMYMONEY 4y ago
For fun: were the developers making the software to knowingly profit off of criminal behavior, and to what degree? Can someone smarter than me talk about how we might judge the mens rea and criminal intent of the developers?
- etchalon 4y ago
  We can't really judge it without evidence, which is likely what authorities are trying to gather.
  - TAKEMYMONEY 4y ago
    Couldn't we argue that the devs reasonably knew it was being used for money laundering? It got a light shined on it during the investigation of the crypto.com hack. If so, they knew they were profiting off of it, right? [1] Tornado Cash also did not comply with the OFAC list of known sanctioned wallets. However, it's clearly not that simple, from the article: > "If Tornado Cash knows who deposited the money and who took it out, that’s not money laundering." > "Smart contracts are not legal contracts." > "Every service provider has a certain amount of illicit activity." https://www.coindesk.com/business/2022/01/21/is-tornado-cash-complicit-in-laundering-stolen-crypto-its-complicated-says-former-law-enforcement-agent/ https://www.coindesk.com/business/2022/01/21/is-tornado-cash...
    - notch656a 4y ago
      So what if they profited off money laundering, and knew it? The guy on the interstate road crew knows damn well the road is used for money laundering, and he builds it anyway and happily deposits his paycheck without taking the slightest effort to impede the launderers.
      - acdha 4y ago
        His paycheck comes from the state, not the mobsters. There’s a big difference between building something which criminals can misuse and being paid by someone with no connection to the criminals compared to building something which is designed for criminal activity and directly receiving payment from them. The Dutch release sounds like they intend to prove that, which is a pretty significant distinction if they can back it up.