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It was used for tumbling, to the tune of $450m by the North Koreans. It's not a theoretical situation.

by cguess 4y ago

mikece 4y ago
And yet, somehow, we knew exactly who was doing it. Why the urgency to shut it down?
- belval 4y ago
- nh23423fefe 4y ago
  You could just read what treasury wrote and argue with facts instead of vague rhetoric about lazy law enforcement > “Today, Treasury is sanctioning Tornado Cash, a virtual currency mixer that launders the proceeds of cybercrimes, including those committed against victims in the United States,” said Under Secretary of the Treasury for Terrorism and Financial Intelligence Brian E. Nelson. “Despite public assurances otherwise, Tornado Cash has repeatedly failed to impose effective controls designed to stop it from laundering funds for malicious cyber actors on a regular basis and without basic measures to address its risks. Treasury will continue to aggressively pursue actions against mixers that launder virtual currency for criminals and those who assist them.” https://home.treasury.gov/news/press-releases/jy0916 https://home.treasury.gov/news/press-releases/jy0916
  - DennisP 4y ago
    There are two Tornado Cash entities: one is made of people, and the other is autonomous code running on chain. The OFAC action confuses those two, and it's not clear they have the authority to sanction code. For much more on this, see the legal analysis by Coincenter: https://www.coincenter.org/analysis-what-is-and-what-is-not-a-sanctionable-entity-in-the-tornado-cash-case/ https://www.coincenter.org/analysis-what-is-and-what-is-not-... Note that FinCEN does pay attention to this sort of distinction, and says that software providers are not subject to money laundering regulation.
- wil421 4y ago
  Why should North Korea be allowed to steal and hack from other country’s people and organizations? It should be shut down immediately. I feel like your trying to say NK and Tornado should be able to do illegal activities that harm people. Just because you don’t like the police or something.
  - mikece 4y ago
    The very fact (or assumed fact) that we know North Korea is using this undercuts the argument that we need to shut this down because it allows for anonymous money laundering. (By definition: the only way money laundering can be "dangerous" is if it cannot be detected or the players identified.)
    - yunohn 4y ago
      No, in this, the authorities had the time/money to track down the hackers. The vast majority of tornado transactions are mostly illegal, but nobody cares enough to spend their efforts on them.
      - x86x87 4y ago
        What a world we are living in. Mostly illegal. Huh. Do you have any data to back this claim? Also, should banks be banned if their customers are doind shady things outside of using their services?
        polygamous_bat 4y ago
        If it's a mafioso bank used mostly by the mafia, then yes, absolutely, they should be investigated and shut down. As for data, just as a first-order estimate, check out the rekt leaderboard [1] and see how many of the stories end with "and the stolen funds were routed through tornado, fin." If all crypto-adjacent crimes are reported to FBI at some point I am sure they have a much clearer statistics, but even as a civilian you can see that it's not small. [1] https://rekt.news/leaderboard/ https://rekt.news/leaderboard/
- giaour 4y ago
  I don’t follow your logic. Isn’t the whole point of mixers that everyone can see dirty money go in, then the forensic trail stops?
- amalcon 4y ago
  Let's suppose you have Bob's Traditional Bank. They keep meticulous records, and comply with US government requests for them (regardless of what you think of such practices, let's just say that this particular bank happens to do those things). They also facilitate transactions on behalf of North Korea. Bob's Traditional Bank would be sanctioned here, because transacting with North Korea in that way is what triggers these sanctions. This is why Tornado is being sanctioned. The privacy thing may or may not be illegal, despite its ineffectiveness, but the transacting with North Korea thing definitely is.
ballenf 4y ago
And what's the value of drugs trafficked over public highways? Or illegal activity coordinated over SMS? Using volume of illegal activity cannot be the primary factor in categorizing a platform.
- yunohn 4y ago
  You’re right, a crypto mixer primarily used to launder money or evade taxes is *exactly the same* as highways and SMS.
  - lampshades 4y ago
    - Closi 4y ago
      Let's imagine for a second that I owned a physical bricks-and-mortar business with a shopfront that took physical cash (USD banknotes), then mixed it up in a big laundry machine with banknotes from other customers, and then I give you back some other banknotes which are totally random (less a fee). Let's also say I don't do any Know Your Customer checks (KYC). Do you think that should be legal (like highways and SMS) or illegal (like money laundering)?
    - polygamous_bat 4y ago
      You can literally go through the rekt leaderboard [1] and count how many of the stories end with "and then the funds were routed to tornado cash, fin." It's not exactly a secret, and it doesn't require any specuation. [1] https://rekt.news/leaderboard/ https://rekt.news/leaderboard/
    - res0nat0r 4y ago
      ? https://home.treasury.gov/news/press-releases/jy0916 https://home.treasury.gov/news/press-releases/jy0916
sam0x17 4y ago
If that's the cost of a freer internet that's fine with me. I don't care if it's $10t.
- x86x87 4y ago
  That's a very limited way of looking at things. You're fine with banning X and Y because you don't see them impacting you. When Z is banned and you care about Z you'll have a rude awakening.
  - nibbleshifter 4y ago
    I think the poster was saying they are fine with that amount if laundry, because its more important for a free internet to exist.
    - x86x87 4y ago
      After rereading I agree with you. It wasn't clear to me whem first reading it.
  - npc54321 4y ago
    It's obvious sam0x17 is against blocking anything.
- deleted 4y ago
  [deleted]
whatisweb3 4y ago
450m is a whopping 6% of all deposits on Tornado Cash[1]. The total percentage of illicit activity on the protocol is reported to be in the 10-30% range[2]. What percentage of activity in an E2EE chat application like Matrix is illicit? If a significant but minority percentage of its use is facilitating criminal discussion, should those open protocols also be sanctioned? [1] https://dune.com/poma/tornado-cash_1 https://dune.com/poma/tornado-cash_1 [2] https://www.eff.org/deeplinks/2022/08/code-speech-and-tornado-cash-mixer https://www.eff.org/deeplinks/2022/08/code-speech-and-tornad...
- pclmulqdq 4y ago
  This isn't about the fraction of illicit use. A large fraction of Americans with numbered/anonymous Swiss bank accounts did nothing wrong with them - a much larger fraction than tornado cash users. However, they were still banned for US citizens due to US KYC rules. The land of free speech is obsessed with being able to trace money as it travels. No surprise they would go after a service whose explicit purpose is to break the chain of custody on money.
  - bitxbitxbitcoin 4y ago
    Banning the use of Tornado Cash is one thing - I didn’t see any Swiss bankers arrested or prosecuted for money laundering during that move.
    - pclmulqdq 4y ago
      You mean like these Swiss bankers? https://www.reuters.com/article/us-usa-switzerland-tax/ex-swiss-banker-goes-home-after-u-s-loses-extradition-from-germany-idUSKBN13Y23N https://www.reuters.com/article/us-usa-switzerland-tax/ex-sw... https://www.justice.gov/usao-sdny/pr/manhattan-us-attorney-charges-swiss-lawyer-and-swiss-banker-conspiring-hide-millions https://www.justice.gov/usao-sdny/pr/manhattan-us-attorney-c... https://www.justice.gov/opa/pr/former-ubs-banker-charged-helping-us-taxpayers-use-secret-swiss-bank-accounts-evade-us-taxes https://www.justice.gov/opa/pr/former-ubs-banker-charged-hel... This wasn't mainstream news, but neither was the sanctioning of Tornado cash. You just happened to hear about one but not the other.

It was used for tumbling, to the tune of $450m by the North Koreans. It's not a theoretical situation.

by cguess 4y ago

It was used for tumbling, to the tune of $450m by the North Koreans. It's not a theoretical situation.

mikece 4y ago

And yet, somehow, we knew exactly who was doing it. Why the urgency to shut it down?

belval 4y ago
nh23423fefe 4y ago
You could just read what treasury wrote and argue with facts instead of vague rhetoric about lazy law enforcement > “Today, Treasury is sanctioning Tornado Cash, a virtual currency mixer that launders the proceeds of cybercrimes, including those committed against victims in the United States,” said Under Secretary of the Treasury for Terrorism and Financial Intelligence Brian E. Nelson. “Despite public assurances otherwise, Tornado Cash has repeatedly failed to impose effective controls designed to stop it from laundering funds for malicious cyber actors on a regular basis and without basic measures to address its risks. Treasury will continue to aggressively pursue actions against mixers that launder virtual currency for criminals and those who assist them.” https://home.treasury.gov/news/press-releases/jy0916 https://home.treasury.gov/news/press-releases/jy0916
- DennisP 4y ago
  There are two Tornado Cash entities: one is made of people, and the other is autonomous code running on chain. The OFAC action confuses those two, and it's not clear they have the authority to sanction code. For much more on this, see the legal analysis by Coincenter: https://www.coincenter.org/analysis-what-is-and-what-is-not-a-sanctionable-entity-in-the-tornado-cash-case/ https://www.coincenter.org/analysis-what-is-and-what-is-not-... Note that FinCEN does pay attention to this sort of distinction, and says that software providers are not subject to money laundering regulation.
wil421 4y ago
Why should North Korea be allowed to steal and hack from other country’s people and organizations? It should be shut down immediately. I feel like your trying to say NK and Tornado should be able to do illegal activities that harm people. Just because you don’t like the police or something.
- mikece 4y ago
  The very fact (or assumed fact) that we know North Korea is using this undercuts the argument that we need to shut this down because it allows for anonymous money laundering. (By definition: the only way money laundering can be "dangerous" is if it cannot be detected or the players identified.)
  - yunohn 4y ago
    No, in this, the authorities had the time/money to track down the hackers. The vast majority of tornado transactions are mostly illegal, but nobody cares enough to spend their efforts on them.
    - x86x87 4y ago
      What a world we are living in. Mostly illegal. Huh. Do you have any data to back this claim? Also, should banks be banned if their customers are doind shady things outside of using their services?
      - polygamous_bat 4y ago
        If it's a mafioso bank used mostly by the mafia, then yes, absolutely, they should be investigated and shut down. As for data, just as a first-order estimate, check out the rekt leaderboard [1] and see how many of the stories end with "and the stolen funds were routed through tornado, fin." If all crypto-adjacent crimes are reported to FBI at some point I am sure they have a much clearer statistics, but even as a civilian you can see that it's not small. [1] https://rekt.news/leaderboard/ https://rekt.news/leaderboard/
giaour 4y ago
I don’t follow your logic. Isn’t the whole point of mixers that everyone can see dirty money go in, then the forensic trail stops?
amalcon 4y ago
Let's suppose you have Bob's Traditional Bank. They keep meticulous records, and comply with US government requests for them (regardless of what you think of such practices, let's just say that this particular bank happens to do those things). They also facilitate transactions on behalf of North Korea. Bob's Traditional Bank would be sanctioned here, because transacting with North Korea in that way is what triggers these sanctions. This is why Tornado is being sanctioned. The privacy thing may or may not be illegal, despite its ineffectiveness, but the transacting with North Korea thing definitely is.

ballenf 4y ago

And what's the value of drugs trafficked over public highways? Or illegal activity coordinated over SMS? Using volume of illegal activity cannot be the primary factor in categorizing a platform.

yunohn 4y ago
You’re right, a crypto mixer primarily used to launder money or evade taxes is *exactly the same* as highways and SMS.
- lampshades 4y ago
  - Closi 4y ago
    Let's imagine for a second that I owned a physical bricks-and-mortar business with a shopfront that took physical cash (USD banknotes), then mixed it up in a big laundry machine with banknotes from other customers, and then I give you back some other banknotes which are totally random (less a fee). Let's also say I don't do any Know Your Customer checks (KYC). Do you think that should be legal (like highways and SMS) or illegal (like money laundering)?
  - polygamous_bat 4y ago
    You can literally go through the rekt leaderboard [1] and count how many of the stories end with "and then the funds were routed to tornado cash, fin." It's not exactly a secret, and it doesn't require any specuation. [1] https://rekt.news/leaderboard/ https://rekt.news/leaderboard/
  - res0nat0r 4y ago
    ? https://home.treasury.gov/news/press-releases/jy0916 https://home.treasury.gov/news/press-releases/jy0916

sam0x17 4y ago

If that's the cost of a freer internet that's fine with me. I don't care if it's $10t.

x86x87 4y ago
That's a very limited way of looking at things. You're fine with banning X and Y because you don't see them impacting you. When Z is banned and you care about Z you'll have a rude awakening.
- nibbleshifter 4y ago
  I think the poster was saying they are fine with that amount if laundry, because its more important for a free internet to exist.
  - x86x87 4y ago
    After rereading I agree with you. It wasn't clear to me whem first reading it.
- npc54321 4y ago
  It's obvious sam0x17 is against blocking anything.
deleted 4y ago
[deleted]

whatisweb3 4y ago

450m is a whopping 6% of all deposits on Tornado Cash[1]. The total percentage of illicit activity on the protocol is reported to be in the 10-30% range[2]. What percentage of activity in an E2EE chat application like Matrix is illicit? If a significant but minority percentage of its use is facilitating criminal discussion, should those open protocols also be sanctioned? [1] https://dune.com/poma/tornado-cash_1 https://dune.com/poma/tornado-cash_1 [2] https://www.eff.org/deeplinks/2022/08/code-speech-and-tornado-cash-mixer https://www.eff.org/deeplinks/2022/08/code-speech-and-tornad...

pclmulqdq 4y ago
This isn't about the fraction of illicit use. A large fraction of Americans with numbered/anonymous Swiss bank accounts did nothing wrong with them - a much larger fraction than tornado cash users. However, they were still banned for US citizens due to US KYC rules. The land of free speech is obsessed with being able to trace money as it travels. No surprise they would go after a service whose explicit purpose is to break the chain of custody on money.
- bitxbitxbitcoin 4y ago
  Banning the use of Tornado Cash is one thing - I didn’t see any Swiss bankers arrested or prosecuted for money laundering during that move.
  - pclmulqdq 4y ago
    You mean like these Swiss bankers? https://www.reuters.com/article/us-usa-switzerland-tax/ex-swiss-banker-goes-home-after-u-s-loses-extradition-from-germany-idUSKBN13Y23N https://www.reuters.com/article/us-usa-switzerland-tax/ex-sw... https://www.justice.gov/usao-sdny/pr/manhattan-us-attorney-charges-swiss-lawyer-and-swiss-banker-conspiring-hide-millions https://www.justice.gov/usao-sdny/pr/manhattan-us-attorney-c... https://www.justice.gov/opa/pr/former-ubs-banker-charged-helping-us-taxpayers-use-secret-swiss-bank-accounts-evade-us-taxes https://www.justice.gov/opa/pr/former-ubs-banker-charged-hel... This wasn't mainstream news, but neither was the sanctioning of Tornado cash. You just happened to hear about one but not the other.