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The chief selling point of Tornado Cash is that it's distributed open-source software, with no man in the middle, no single point of failure. That's right: Gov

The chief selling point of Tornado Cash is that it's distributed open-source software, with no man in the middle, no single point of failure. That's right: Government sanctioned open-source SOFTWARE. Are you sure you want this precedent set?

woodruffw 4y ago
I have no problem with Tornado Cash being openly available software under a permissive license. I have a problem with people running a Tornado Cash-based service that is really just a money laundering service. You should take a step back: "open source" does not rinse away the underlying properties of a service. I can't write and deploy a web application that contracts hitmen and use the MIT license as a defense; the latter simply isn't being litigated.
- theplumber 4y ago
  What's the difference between money launderying features and privacy features? Tornado Cash in itself does is not launderying money because you still have to prove to the IRS how you got the money or the asset(i.e bills, invoice etc) and you still have to obey KYC rules. You can't just say the money is from Tornado Cash and be done with it. Is the U.S Mint a money launderying service because it provides an untraceable method (cash) to conduct transactions?
  - woodruffw 4y ago
    The features don't matter. What matters is intent and demonstrating that intent. Both the Treasury and Dutch authorities have reason to believe that Tornado Cash was operated with the intent of facilitating money laundering. It's up to a court to determine the veracity of that accusation.
    - npc54321 4y ago
      Guilty until proven innocent (they are blacklisted/sanctioned) I see.
      - A4ET8a8uTh0 4y ago
        FWIW, the money sanctioned under OFAC is still that of the owner so there is a process in place that has a semblance of the rules of law. However, getting that money released by the bank is nothing short of a herculean effort based on cases I have seen over the years.
      - woodruffw 4y ago
        Not only am I not a court of law, but I specifically said that it's up to a court to make a decision of legal guilt here. In the mean time, yes: the government is allowed to halt activities that it believes are part of an active criminal scheme. Every country with a functioning legal system proscribes this, and establishes a broad swath of controls to ensure that the government can't indefinitely tie up resources.
  - mattficke 4y ago
    To your last question, this is why financial institutions are required to report cash transactions over $10,000. There are a number of constraints on how untraceable cash is.
    - TEP_Kim_Il_Sung 4y ago
      Has this amount ever been adjusted for inflation? It is my understanding, that $10,000 at the time this law was set, was about ¼ the price of a small home.
      - A4ET8a8uTh0 4y ago
        No. Also, there were several recent articles/speeches from various AML/BSA/Fraud folks to lower that amount even further for several purposes including CTR. For better or worse, BSA has become its own industry with a lot of money riding on keeping things annoying to regular people ( and barely doing anything to stop actual criminals, who have skills, patience and resources to bypass all the safeguards ).
  - pigtailgirl 4y ago
    -- if I move $10k - my institution automatically tells the government I moved $10k - if in the US - the receiving institution also tells the government - I don't have an expectation of privacy - is this also true with Tornado Cash? --
    - chrischattin 4y ago
      If you use cash, it's a private transaction (no notification).
  - salawat 4y ago
    KYC applies to money transmitters directly. End consumers only indirectly by virtue of any financial institution ending up in hot water for non-compliance. You don't get to shift regulatory burden to the consumer.
  - marcus_holmes 4y ago
    > What's the difference between money launderying features and privacy features? Really good question. I'd say "if your privacy feature allows you to trade above the trigger limit (usually 10K USD/EUR/GBP) without having to state the source of your funds, then it's actually a money laundering feature"
    - ashwagary 4y ago
      If the funds aren't procured through criminal activity, then it can't be considered money laundering. Only if the individual doesn't declare a taxable event to a tax authority has a crime been committed.
      - marcus_holmes 4y ago
        no, it's money laundering even if the funds haven't been procured from criminal activity. The regulations don't care where the money comes from, they're just specifying what reporting needs to happen around the movement of money. Not being able to properly describe where the money comes from is a crime. I've worked in the finance industry, and I've worked with people who've seen bad guys turn up with suitcases full of other people's money. I'm totally happy that these regulations are in place.
        ashwagary 4y ago
        >>no, it's money laundering even if the funds haven't been procured from criminal activity. You are wrong. FINCEN "Money laundering involves disguising financial assets so they can be used without detection of the illegal activity that produced them." WIKIPEDIA "Money laundering is the process of concealing the origin of money obtained from illicit activities such as drug trafficking, corruption, embezzlement or gambling, by converting it into a legitimate source." https://www.fincen.gov/what-money-laundering https://www.fincen.gov/what-money-laundering https://en.wikipedia.org/wiki/Money_laundering https://en.wikipedia.org/wiki/Money_laundering
- sam0x17 4y ago
  Money crimes should be prosecuted and solved at their start points and endpoints, not within the financial system. Failure to adhere to this standard is why we no longer really control the money in our bank accounts anymore. Want to send a wire to your friend living in the middle east with a sketchy name? Might get flagged. Want to purchase something out of the ordinary for you online? Your debit card will probably block it at least at first. Law enforcement has become lazy and we have as well. Instead of solving actual crimes, we just use ML algorithms to find sketchy-looking transactions and then block them and investigate later maybe. This has significantly reduced our privacy and freedom at a much higher cost than the purported gains. This is the whole motivation behind the original push into crypto in the early 00s. We need something not beholding to any government that is as good as cash but digital, and the US gov sanctioning a mixer is just proof of this dire need.
  - sofixa 4y ago
    > Money crimes should be prosecuted and solved at their start points and endpoints, not within the financial system. Failure to adhere to this standard is why we no longer really control the money in our bank accounts anymore That's easier said than done. It's drastically easier to catch crime by it's results (money) than in the act. Famously that's how Capone was caught. And what would be the advantage of that, to anyone? I doubt that erroneously flagged transactions are a real problem. Do you have any numbers on the matter?
    - A4ET8a8uTh0 4y ago
      And this is where it gets fun. Banks will absolutely not tell the customer that their transaction is flagged for one reason or another partly so that they do not lose their 'safe harbor' status under BSA. Any numbers you will see might be from the government, but FinCEN is relatively tight lipped about those for a variety of reasons. The discussion is taking place now, because it has become fairly onerous on an average person, who sends anything to MOHAMMED HASSAN. Instead of data, I can only offer anecdata. Long long time ( or not long ago depending on your perception of time ), we had a person, whose transaction matched some OFAC info, which resulted in bank holding the transaction. I cannot go into details beyond saying that eventually even OFAC representative seemed to admit to that it does not seem to apply to him. To the best of my knowledge, a year after that person still did not get his funds. It may have not happened to you, but I do not think it is as uncommon as you think. Parent is right. We are doing this backwards.
- whatisweb3 4y ago
  You actually could publish “illegal code” because code is protected under 1st amendment, as free speech. Legal precedent has been set by Bernstein v US DoJ. There is an open question about whether publishing non custodial contract code on Ethereum counts as providing a service. If you post 10 lines of immutable code onto Ethereum, and some years later a user chooses to run this code on their machines for criminal behavior, should you be prosecuted?
- everfree 4y ago
  > I have a problem with people running a Tornado Cash-based service that is really just a money laundering service. The treasury ban is on the contract itself, not TC-based services that people might run.
duped 4y ago
> The chief selling point of Tornado Cash is that it's distributed open-source software, with no man in the middle, no single point of failure for laundering money. You can't remove the key feature from metaproperties of the software and call the latter the "chief selling point."
- TEP_Kim_Il_Sung 4y ago
  So say you, and yet my claim is self-evident, while yours needs hordes of robe&badge clad bureaucrats, and the promise of violence, to enforce.
  - JumpCrisscross 4y ago
    > yet my claim is self-evident, while yours needs hordes of robe&badge clad bureaucrats You’re describing due process. That’s a feature. An AK-47 being metallic may be self evident. That doesn’t make it relevant to a murder investigation.
    - TEP_Kim_Il_Sung 4y ago
      An AK-47 is not relevent to a murder investigation. There are thousands of them in the U.S. and owned by innocents. It would be unreasonable to come after all AK-47 owners because one was used in a crime. Rather, it would be up to the cops to find other facts about the weapon, perhaps how much more metallic it looked than your standard AK, and in which spots. Wear marks can be just as revealing as serial numbers.
      - JumpCrisscross 4y ago
        > would be unreasonable to come after all AK-47 owners because one was used in a crime Every mixer isn’t sanctioned. Just the one used to launder money by Pyongyang. None of this is novel.
kevin_thibedeau 4y ago
PGP set that precedent decades ago. They just need to publish the source as a book.

woodruffw 4y ago

I have no problem with Tornado Cash being openly available software under a permissive license. I have a problem with people running a Tornado Cash-based service that is really just a money laundering service. You should take a step back: "open source" does not rinse away the underlying properties of a service. I can't write and deploy a web application that contracts hitmen and use the MIT license as a defense; the latter simply isn't being litigated.

theplumber 4y ago
What's the difference between money launderying features and privacy features? Tornado Cash in itself does is not launderying money because you still have to prove to the IRS how you got the money or the asset(i.e bills, invoice etc) and you still have to obey KYC rules. You can't just say the money is from Tornado Cash and be done with it. Is the U.S Mint a money launderying service because it provides an untraceable method (cash) to conduct transactions?
- woodruffw 4y ago
  The features don't matter. What matters is intent and demonstrating that intent. Both the Treasury and Dutch authorities have reason to believe that Tornado Cash was operated with the intent of facilitating money laundering. It's up to a court to determine the veracity of that accusation.
  - npc54321 4y ago
    Guilty until proven innocent (they are blacklisted/sanctioned) I see.
    - A4ET8a8uTh0 4y ago
      FWIW, the money sanctioned under OFAC is still that of the owner so there is a process in place that has a semblance of the rules of law. However, getting that money released by the bank is nothing short of a herculean effort based on cases I have seen over the years.
    - woodruffw 4y ago
      Not only am I not a court of law, but I specifically said that it's up to a court to make a decision of legal guilt here. In the mean time, yes: the government is allowed to halt activities that it believes are part of an active criminal scheme. Every country with a functioning legal system proscribes this, and establishes a broad swath of controls to ensure that the government can't indefinitely tie up resources.
- mattficke 4y ago
  To your last question, this is why financial institutions are required to report cash transactions over $10,000. There are a number of constraints on how untraceable cash is.
  - TEP_Kim_Il_Sung 4y ago
    Has this amount ever been adjusted for inflation? It is my understanding, that $10,000 at the time this law was set, was about ¼ the price of a small home.
    - A4ET8a8uTh0 4y ago
      No. Also, there were several recent articles/speeches from various AML/BSA/Fraud folks to lower that amount even further for several purposes including CTR. For better or worse, BSA has become its own industry with a lot of money riding on keeping things annoying to regular people ( and barely doing anything to stop actual criminals, who have skills, patience and resources to bypass all the safeguards ).
- pigtailgirl 4y ago
  -- if I move $10k - my institution automatically tells the government I moved $10k - if in the US - the receiving institution also tells the government - I don't have an expectation of privacy - is this also true with Tornado Cash? --
  - chrischattin 4y ago
    If you use cash, it's a private transaction (no notification).
- salawat 4y ago
  KYC applies to money transmitters directly. End consumers only indirectly by virtue of any financial institution ending up in hot water for non-compliance. You don't get to shift regulatory burden to the consumer.
- marcus_holmes 4y ago
  > What's the difference between money launderying features and privacy features? Really good question. I'd say "if your privacy feature allows you to trade above the trigger limit (usually 10K USD/EUR/GBP) without having to state the source of your funds, then it's actually a money laundering feature"
  - ashwagary 4y ago
    If the funds aren't procured through criminal activity, then it can't be considered money laundering. Only if the individual doesn't declare a taxable event to a tax authority has a crime been committed.
    - marcus_holmes 4y ago
      no, it's money laundering even if the funds haven't been procured from criminal activity. The regulations don't care where the money comes from, they're just specifying what reporting needs to happen around the movement of money. Not being able to properly describe where the money comes from is a crime. I've worked in the finance industry, and I've worked with people who've seen bad guys turn up with suitcases full of other people's money. I'm totally happy that these regulations are in place.
      - ashwagary 4y ago
        >>no, it's money laundering even if the funds haven't been procured from criminal activity. You are wrong. FINCEN "Money laundering involves disguising financial assets so they can be used without detection of the illegal activity that produced them." WIKIPEDIA "Money laundering is the process of concealing the origin of money obtained from illicit activities such as drug trafficking, corruption, embezzlement or gambling, by converting it into a legitimate source." https://www.fincen.gov/what-money-laundering https://www.fincen.gov/what-money-laundering https://en.wikipedia.org/wiki/Money_laundering https://en.wikipedia.org/wiki/Money_laundering
sam0x17 4y ago
Money crimes should be prosecuted and solved at their start points and endpoints, not within the financial system. Failure to adhere to this standard is why we no longer really control the money in our bank accounts anymore. Want to send a wire to your friend living in the middle east with a sketchy name? Might get flagged. Want to purchase something out of the ordinary for you online? Your debit card will probably block it at least at first. Law enforcement has become lazy and we have as well. Instead of solving actual crimes, we just use ML algorithms to find sketchy-looking transactions and then block them and investigate later maybe. This has significantly reduced our privacy and freedom at a much higher cost than the purported gains. This is the whole motivation behind the original push into crypto in the early 00s. We need something not beholding to any government that is as good as cash but digital, and the US gov sanctioning a mixer is just proof of this dire need.
- sofixa 4y ago
  > Money crimes should be prosecuted and solved at their start points and endpoints, not within the financial system. Failure to adhere to this standard is why we no longer really control the money in our bank accounts anymore That's easier said than done. It's drastically easier to catch crime by it's results (money) than in the act. Famously that's how Capone was caught. And what would be the advantage of that, to anyone? I doubt that erroneously flagged transactions are a real problem. Do you have any numbers on the matter?
  - A4ET8a8uTh0 4y ago
    And this is where it gets fun. Banks will absolutely not tell the customer that their transaction is flagged for one reason or another partly so that they do not lose their 'safe harbor' status under BSA. Any numbers you will see might be from the government, but FinCEN is relatively tight lipped about those for a variety of reasons. The discussion is taking place now, because it has become fairly onerous on an average person, who sends anything to MOHAMMED HASSAN. Instead of data, I can only offer anecdata. Long long time ( or not long ago depending on your perception of time ), we had a person, whose transaction matched some OFAC info, which resulted in bank holding the transaction. I cannot go into details beyond saying that eventually even OFAC representative seemed to admit to that it does not seem to apply to him. To the best of my knowledge, a year after that person still did not get his funds. It may have not happened to you, but I do not think it is as uncommon as you think. Parent is right. We are doing this backwards.
whatisweb3 4y ago
You actually could publish “illegal code” because code is protected under 1st amendment, as free speech. Legal precedent has been set by Bernstein v US DoJ. There is an open question about whether publishing non custodial contract code on Ethereum counts as providing a service. If you post 10 lines of immutable code onto Ethereum, and some years later a user chooses to run this code on their machines for criminal behavior, should you be prosecuted?
everfree 4y ago
> I have a problem with people running a Tornado Cash-based service that is really just a money laundering service. The treasury ban is on the contract itself, not TC-based services that people might run.

duped 4y ago

> The chief selling point of Tornado Cash is that it's distributed open-source software, with no man in the middle, no single point of failure for laundering money. You can't remove the key feature from metaproperties of the software and call the latter the "chief selling point."

TEP_Kim_Il_Sung 4y ago
So say you, and yet my claim is self-evident, while yours needs hordes of robe&badge clad bureaucrats, and the promise of violence, to enforce.
- JumpCrisscross 4y ago
  > yet my claim is self-evident, while yours needs hordes of robe&badge clad bureaucrats You’re describing due process. That’s a feature. An AK-47 being metallic may be self evident. That doesn’t make it relevant to a murder investigation.
  - TEP_Kim_Il_Sung 4y ago
    An AK-47 is not relevent to a murder investigation. There are thousands of them in the U.S. and owned by innocents. It would be unreasonable to come after all AK-47 owners because one was used in a crime. Rather, it would be up to the cops to find other facts about the weapon, perhaps how much more metallic it looked than your standard AK, and in which spots. Wear marks can be just as revealing as serial numbers.
    - JumpCrisscross 4y ago
      > would be unreasonable to come after all AK-47 owners because one was used in a crime Every mixer isn’t sanctioned. Just the one used to launder money by Pyongyang. None of this is novel.

kevin_thibedeau 4y ago

PGP set that precedent decades ago. They just need to publish the source as a book.