8 ms·

Tornado needs TVL to effectively launder money for criminals. Forks without much TVL don't seem that dangerous

amluto 4y ago
A piece of code on GitHub has zero TVL. It's just a bunch of files. (I would assume the treasury department only gets involved when there is actual money involved. Sending money to a contract on the blockchain is finance. Just posting the code somewhere is speech.)
- oceanstone 4y ago
  Obviously, the threat is deployed forks with high TVL
  - chrisco255 4y ago
    Is it? Given that the original code still exists on mainnet and cannot be taken down. I suppose the main use case of a high TVL fork would be for Americans who wanted to legally regain their privacy without risking a sanctioned contract interaction. Anyone who doesn't care can still use the original.
notch656a 4y ago
I mean couldn't I also argue TVL is speech like source code? Or does code have to be without value to be protected?
Retr0id 4y ago
TVL is not a property of the source code.
- deleted 4y ago
  [deleted]
charcircuit 4y ago
This is a fork of the code. It's not a new deployment.
babyshake 4y ago
I wonder if it is possible to have a variation of Tornado where the TVL automatically moves to a new deployment at a new random address every N blocks, so that it's not as simple to have specific addresses sanctioned. I don't know Tornado very well and don't know if this would be possible.
- guipsp 4y ago
  I mean, you'd sanction that address and any other it deploys to. In addition, sanctions are transitive (by how much no one knows).
  - bee_rider 4y ago
    Not knowing anything about cryptocurrencies or running distributed systems on the wilds of the internet, I will ask a dumb question: Is it possible to design an algorithm that comes to a consensus on what new address to use faster than the legal system can sanction them?
    - EddySchauHai 4y ago
      You could cascade the sanctions so any addresses touched by sanctioned addresses becomes sanctioned too; that leads you open to trolling and abuse where a sanctioned address sends money to celebrities to impact them. This could probably be dealt with by saying anyone who uses an obvious Tornado-style contract that's been sent money from XYZ address is illegal, so you don't end up with the trolling, but I don't know for sure how that'd work.
      - bee_rider 4y ago
        There are still big legitimate institutional entities doing crypto, right? At some point you must hit "7 degrees to Wells Fargo" or whatever, right?
    - chrisco255 4y ago
      Of course. It's a riskier implementation from a smart contract security standpoint, but entirely possible.
yieldcrv 4y ago
This is just so you can compile the UI locally, without worrying about using a potentially compromised mirror that will steal your funds. For those of us with licenses from the US treasury for exemption from a specific sanctioned entity, this is still important.
- User23 4y ago
  That sounds like an opportunity for a sweetheart deal. Hey you can sell your locked assets, but only at firesale prices to this licensed entity.
  - yieldcrv 4y ago
    Maybe, but you might be misunderstanding how that works as well as assumptions about crypto user stories. there is a sanction on US persons from merely interacting with the deployed Tornado Cash contract, so there is a potential fine and prison sentence for just doing that. The license removes that liability. the assets you receive out of Tornado Cash can be used the same as before. Exchanges may flag those funds arbitrarily, but other smart contracts and merchants do not. Many people stay directly on chain and pay for goods and services, and invest, without issue. Many people can derive real world benefits from things they purchase with their crypto, whether that thing is digital or physical. Its not about "cashing out", but if so, those people can still just deposit into some onchain lending service and cash out the borrowed funds, as exchanges themselves don't dig that deep and if that individual has the OFAC license it doesn't matter. for those that choose to go to the treasury to get a license, they can always prove provenance of their tornado cash assets and prove they're clean, which is a key feature of tornado cash. so its not a good assumption that the treasury would target that person to make a deal, because there wouldn't be any liability at all, only the novelty of making the application for the license.
    - User23 4y ago
      > The license removes that liability As you evidently know, that's the defining characteristic of a license: it removes criminal or civil liability for an otherwise illicit act. For example a Barber's license permits a person to hold a knife to someone's throat without it being assault, modulo some additional conditions. So much for generalities. To the specifics, you look to be quite well informed on this particular matter. Are you saying that someone that has assets in Tornado that they cannot otherwise cash out without violating sanctions can lawfully sell them to a licensee, but nobody else? Because if so that sounds like a wonderful buying opportunity for the licensee. Or is getting a license trivially easy, such that anyone with assets legally tied up can just go through a TSA pre level process to establish that they're not an international terrorist drug dealing child trafficker, or whatever activity these sanctions are meant to discourage?
rattlesnakedave 4y ago
I take issue with the claim that tornado can “effectively launder money for criminals.” All it can do is leave you with an asset with a less-than-clear on chain history. If you want to cash out, you still have to explain how you wound up with 100 ETH or whatever.
- notch656a 4y ago
  Even if it does, who gives a shit? The interstate road crew happily builds the interstate, knowing money launderers use it without taking the slightest precaution to stop them. They cash their paycheck, knowing some of the money thrown in the 'mixer' of the treasury was the money of the money launderers paying their taxes that build the interstate.
  - mint2 4y ago
    The road crew is like the workers at an internet provider or maybe an isp, and the vast majority of the traffic is legal. That original analogy makes it seem like the verdict on tornado was already made, now we just need to grasp at arguments to support the pre-made conclusion. It backfires. Don’t shoot the messenger.
- cypress66 4y ago
  Exactly. I hate this false idea that TC launders your money. Your TC money isn't any more laundered than a pile of cash you got by selling meth. Laundering means making up some origin for such money (such as a business).
  - rattlesnakedave 4y ago
    Kinda. Money laundering consists of placement, layering, and integration. There is a (very weak, imo) argument that TC can be a part of the “layering” process, but it certainly does not do all three.
- oceanstone 4y ago
  North Korea laundered a billion dollars through Tornado https://markets.businessinsider.com/news/currencies/north-korea-launder-treasury-ethereum-us-billion-sanctions-tornado-cash-2022-8 https://markets.businessinsider.com/news/currencies/north-ko...
pavon 4y ago
Had to look that up. TVL = Total Value Locked. E.g. the code itself doesn't and can't make an effective mixer, a high volume of the money flowing through a specific mixer service is necessary.

A piece of code on GitHub has zero TVL. It's just a bunch of files. (I would assume the treasury department only gets involved when there is actual money involved. Sending money to a contract on the blockchain is finance. Just posting the code somewhere is speech.)

oceanstone 4y ago
Obviously, the threat is deployed forks with high TVL
- chrisco255 4y ago
  Is it? Given that the original code still exists on mainnet and cannot be taken down. I suppose the main use case of a high TVL fork would be for Americans who wanted to legally regain their privacy without risking a sanctioned contract interaction. Anyone who doesn't care can still use the original.

notch656a 4y ago

I mean couldn't I also argue TVL is speech like source code? Or does code have to be without value to be protected?

Retr0id 4y ago

TVL is not a property of the source code.

deleted 4y ago
[deleted]

charcircuit 4y ago

This is a fork of the code. It's not a new deployment.

babyshake 4y ago

I wonder if it is possible to have a variation of Tornado where the TVL automatically moves to a new deployment at a new random address every N blocks, so that it's not as simple to have specific addresses sanctioned. I don't know Tornado very well and don't know if this would be possible.

guipsp 4y ago
I mean, you'd sanction that address and any other it deploys to. In addition, sanctions are transitive (by how much no one knows).
- bee_rider 4y ago
  Not knowing anything about cryptocurrencies or running distributed systems on the wilds of the internet, I will ask a dumb question: Is it possible to design an algorithm that comes to a consensus on what new address to use faster than the legal system can sanction them?
  - EddySchauHai 4y ago
    You could cascade the sanctions so any addresses touched by sanctioned addresses becomes sanctioned too; that leads you open to trolling and abuse where a sanctioned address sends money to celebrities to impact them. This could probably be dealt with by saying anyone who uses an obvious Tornado-style contract that's been sent money from XYZ address is illegal, so you don't end up with the trolling, but I don't know for sure how that'd work.
    - bee_rider 4y ago
      There are still big legitimate institutional entities doing crypto, right? At some point you must hit "7 degrees to Wells Fargo" or whatever, right?
  - chrisco255 4y ago
    Of course. It's a riskier implementation from a smart contract security standpoint, but entirely possible.

yieldcrv 4y ago

This is just so you can compile the UI locally, without worrying about using a potentially compromised mirror that will steal your funds. For those of us with licenses from the US treasury for exemption from a specific sanctioned entity, this is still important.

User23 4y ago
That sounds like an opportunity for a sweetheart deal. Hey you can sell your locked assets, but only at firesale prices to this licensed entity.
- yieldcrv 4y ago
  Maybe, but you might be misunderstanding how that works as well as assumptions about crypto user stories. there is a sanction on US persons from merely interacting with the deployed Tornado Cash contract, so there is a potential fine and prison sentence for just doing that. The license removes that liability. the assets you receive out of Tornado Cash can be used the same as before. Exchanges may flag those funds arbitrarily, but other smart contracts and merchants do not. Many people stay directly on chain and pay for goods and services, and invest, without issue. Many people can derive real world benefits from things they purchase with their crypto, whether that thing is digital or physical. Its not about "cashing out", but if so, those people can still just deposit into some onchain lending service and cash out the borrowed funds, as exchanges themselves don't dig that deep and if that individual has the OFAC license it doesn't matter. for those that choose to go to the treasury to get a license, they can always prove provenance of their tornado cash assets and prove they're clean, which is a key feature of tornado cash. so its not a good assumption that the treasury would target that person to make a deal, because there wouldn't be any liability at all, only the novelty of making the application for the license.
  - User23 4y ago
    > The license removes that liability As you evidently know, that's the defining characteristic of a license: it removes criminal or civil liability for an otherwise illicit act. For example a Barber's license permits a person to hold a knife to someone's throat without it being assault, modulo some additional conditions. So much for generalities. To the specifics, you look to be quite well informed on this particular matter. Are you saying that someone that has assets in Tornado that they cannot otherwise cash out without violating sanctions can lawfully sell them to a licensee, but nobody else? Because if so that sounds like a wonderful buying opportunity for the licensee. Or is getting a license trivially easy, such that anyone with assets legally tied up can just go through a TSA pre level process to establish that they're not an international terrorist drug dealing child trafficker, or whatever activity these sanctions are meant to discourage?

rattlesnakedave 4y ago

I take issue with the claim that tornado can “effectively launder money for criminals.” All it can do is leave you with an asset with a less-than-clear on chain history. If you want to cash out, you still have to explain how you wound up with 100 ETH or whatever.

notch656a 4y ago
Even if it does, who gives a shit? The interstate road crew happily builds the interstate, knowing money launderers use it without taking the slightest precaution to stop them. They cash their paycheck, knowing some of the money thrown in the 'mixer' of the treasury was the money of the money launderers paying their taxes that build the interstate.
- mint2 4y ago
  The road crew is like the workers at an internet provider or maybe an isp, and the vast majority of the traffic is legal. That original analogy makes it seem like the verdict on tornado was already made, now we just need to grasp at arguments to support the pre-made conclusion. It backfires. Don’t shoot the messenger.
cypress66 4y ago
Exactly. I hate this false idea that TC launders your money. Your TC money isn't any more laundered than a pile of cash you got by selling meth. Laundering means making up some origin for such money (such as a business).
- rattlesnakedave 4y ago
  Kinda. Money laundering consists of placement, layering, and integration. There is a (very weak, imo) argument that TC can be a part of the “layering” process, but it certainly does not do all three.
oceanstone 4y ago
North Korea laundered a billion dollars through Tornado https://markets.businessinsider.com/news/currencies/north-korea-launder-treasury-ethereum-us-billion-sanctions-tornado-cash-2022-8 https://markets.businessinsider.com/news/currencies/north-ko...

pavon 4y ago

Had to look that up. TVL = Total Value Locked. E.g. the code itself doesn't and can't make an effective mixer, a high volume of the money flowing through a specific mixer service is necessary.