7 ms·

Seems like a forced defensive move given the new Coinbase sponsored lawsuit. Treasury would probably prefer these freedom aren't even given, but they'll lose o

Seems like a forced defensive move given the new Coinbase sponsored lawsuit. Treasury would probably prefer these freedom aren't even given, but they'll lose on these points so badly that it's face-saving to concede first.

salawat 4y ago
Not really, I'd rank this as "saying the obvious stuff to get it done and over with". Treasury knows it has standing, and how. They don't give a squib what you do with the code. As long as you don't facilitate transaction processing with it (i.e. money transmitting) with it. The legal teams of the Crypto world basically have to convince the Supreme Court that the Executive does not have the right to engage in economic foreign policy. I don't see that happening.
- DennisP 4y ago
  Here are Coincenter's arguments that OFAC actually has exceeded their authority: 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-...
  - buildbot 4y ago
    Are they lawyers who specialize in Federal law and financial crime?
  - woodruffw 4y ago
    The argument advanced here is perverse: you can’t erase the illegality of an action by making it autonomous. In other words: putting a brick on the car’s accelerator doesn’t absolve you when the car runs someone over — the law recognizes that a human or set of humans is the efficient cause of the crime, regardless of how much code (or steel) you obscure it with.
    - notch656a 4y ago
      The entertaining thing here, though, is the creators of TC made the blueprint for a brick and then told a bunch of other people running ethereum virtual machines they they had a plan for a brick. Some initial gas fees were paid so the users would actually absorb the 'brick' program. Then the creator of TC stepped away. The node operators took the gas fees in exchange for putting the brick on their accelerator and validated the brick contracts. Who's to sanction here? Honestly the node operators running the Ethereum virtual machine 'car' look like the closest human to hold accountable, if that's the desirable outcome. Continuing our logic, ethereum should basically be shutdown if the runners of the brick program are to be held accountable, because that's basically every node.
      - woodruffw 4y ago
        This is a fantastic point, and (IMO) reveals the government’s actual intended strategy here. For better or worse, the government seems to be intent on making a lesson out of the Tornado Cash developer, rather than attempting (probably pointlessly) to shut down all of Ethereum. The point seems to be to send a message: if you publish the brick blueprint, you will be considered the entity responsible. This accomplishes both of the government’s goals: it disincentives future attempts to launder money through smart contracts, and it avoids a protracted legal and technical battle over individual cryptocurrencies and their networks. Edit: And there are clear parallels in existing legal reasoning: we do not prosecute steel factories for following a client’s specification faithfully, even if it’s later revealed that the specification was in furtherance of something illegal to manufacture (like an unregulated weapon). The exception is when the factory goes to unusual lengths to turn a blind eye, which the government might present evidence to argue negligence or conspiracy.
        DennisP 4y ago
        In that case the government runs into First Amendment issues. Bernstein vs. US ruled that source code counts as protected speech, and courts do consider chilling effects to be infringement.
      - 4y ago
  - nl 4y ago
    Neither of these people are lawyers, and their interpretation of the law has roughly as much validity as a HN comment on the law: sounds good, probably wrong.
    - salawat 4y ago
      The IANAL caveat always applies, but I also counter with "one would be dumb to think the Government would throw up their hands at having been thwarted by this one weird trick. The obligatory reference to rubber hose cryptanalysis is always something to keep in mind.
- yieldcrv 4y ago
  > The legal teams of the Crypto world basically have to convince the Supreme Court that the Executive does not have the right to engage in economic foreign policy. One easy argument is that there is no way to prove that Tornado Cash contracts are foreign assets at all. Ethereum nodes do not know which node - or its geographical placement - saw the deployment transaction first. So it is just as easily deployed from the United States and operates from the United States most of the time, or simultaneously all the time, as all nodes execute the updates states (or Tornado Cash and every contract) and many/most are in the US. The US has other enforcement tools. OFAC here wasn't it.
  - salawat 4y ago
    Alright, I get it, it's not sinking in, so let me break it down. >Access to the U.S. electronically facilitated financial system is one of the strongest forms of soft power projection on Earth. >This is made possible through money transmission being regulated. >Part of being an authorized money transmitter is compliance with OFAC sanctions on a strict liability basis. OFAC sanctions are not constrained by by normal constraints on domestic law enforcement. You can end up on the OFAC list. You can appeal it, but the burden of proof is on you, and the Government does not have to share with you why you got put on there in the first place. >Sanctions are often diplomatic. Courts will not say the executive does not have standing, as it's enumerated right in the Constitution, that is the Federal Government's job. >Violation of sanctions as a U.S. citizen is criminal. While it is not necessarily practicable yet to ascertain which node originated a particular block, it is not impossible to sufficiently instrument enough of the network to make such determinations possible, and eith PoS tending to centralize, the value of setting up said monitoring to facilitate enforceability is high, even if only for investigative/intelligence community purposes. Remember, these are the people who brought you PRISM.* >Any violations of sanctions will be transparently evident on the blockchain. The receiving address of the value from the sanctioned address will be added to the SDN. >The overall network effect is such that no one that desires to do business in the U.S. will cash out your coin. >No technical impossibilities exists that will prevent this eventual outcome. The only X factor, is how much time it will take for the tooling to get there
    - 4y ago
JumpCrisscross 4y ago
> Treasury would probably prefer these freedom aren't even given This is how it always worked. Go back to the original articles and read the comments defending OFAC. The code was never sanctioned. The project was. The fact that the project involves an instance of code on an immutable blockchain is mumbo jumbo.
smsm42 4y ago
They'd probably need to get some law like DMCA that would prohibit such code, but they don't have it yet, so they don't have a leg to stand on with regard to proscribing the code. They'll probably get to asking for such law pretty soon though.

salawat 4y ago

Not really, I'd rank this as "saying the obvious stuff to get it done and over with". Treasury knows it has standing, and how. They don't give a squib what you do with the code. As long as you don't facilitate transaction processing with it (i.e. money transmitting) with it. The legal teams of the Crypto world basically have to convince the Supreme Court that the Executive does not have the right to engage in economic foreign policy. I don't see that happening.

DennisP 4y ago
Here are Coincenter's arguments that OFAC actually has exceeded their authority: 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-...
- buildbot 4y ago
  Are they lawyers who specialize in Federal law and financial crime?
- woodruffw 4y ago
  The argument advanced here is perverse: you can’t erase the illegality of an action by making it autonomous. In other words: putting a brick on the car’s accelerator doesn’t absolve you when the car runs someone over — the law recognizes that a human or set of humans is the efficient cause of the crime, regardless of how much code (or steel) you obscure it with.
  - notch656a 4y ago
    The entertaining thing here, though, is the creators of TC made the blueprint for a brick and then told a bunch of other people running ethereum virtual machines they they had a plan for a brick. Some initial gas fees were paid so the users would actually absorb the 'brick' program. Then the creator of TC stepped away. The node operators took the gas fees in exchange for putting the brick on their accelerator and validated the brick contracts. Who's to sanction here? Honestly the node operators running the Ethereum virtual machine 'car' look like the closest human to hold accountable, if that's the desirable outcome. Continuing our logic, ethereum should basically be shutdown if the runners of the brick program are to be held accountable, because that's basically every node.
    - woodruffw 4y ago
      This is a fantastic point, and (IMO) reveals the government’s actual intended strategy here. For better or worse, the government seems to be intent on making a lesson out of the Tornado Cash developer, rather than attempting (probably pointlessly) to shut down all of Ethereum. The point seems to be to send a message: if you publish the brick blueprint, you will be considered the entity responsible. This accomplishes both of the government’s goals: it disincentives future attempts to launder money through smart contracts, and it avoids a protracted legal and technical battle over individual cryptocurrencies and their networks. Edit: And there are clear parallels in existing legal reasoning: we do not prosecute steel factories for following a client’s specification faithfully, even if it’s later revealed that the specification was in furtherance of something illegal to manufacture (like an unregulated weapon). The exception is when the factory goes to unusual lengths to turn a blind eye, which the government might present evidence to argue negligence or conspiracy.
      - DennisP 4y ago
        In that case the government runs into First Amendment issues. Bernstein vs. US ruled that source code counts as protected speech, and courts do consider chilling effects to be infringement.
    - 4y ago
- nl 4y ago
  Neither of these people are lawyers, and their interpretation of the law has roughly as much validity as a HN comment on the law: sounds good, probably wrong.
  - salawat 4y ago
    The IANAL caveat always applies, but I also counter with "one would be dumb to think the Government would throw up their hands at having been thwarted by this one weird trick. The obligatory reference to rubber hose cryptanalysis is always something to keep in mind.
yieldcrv 4y ago
> The legal teams of the Crypto world basically have to convince the Supreme Court that the Executive does not have the right to engage in economic foreign policy. One easy argument is that there is no way to prove that Tornado Cash contracts are foreign assets at all. Ethereum nodes do not know which node - or its geographical placement - saw the deployment transaction first. So it is just as easily deployed from the United States and operates from the United States most of the time, or simultaneously all the time, as all nodes execute the updates states (or Tornado Cash and every contract) and many/most are in the US. The US has other enforcement tools. OFAC here wasn't it.
- salawat 4y ago
  Alright, I get it, it's not sinking in, so let me break it down. >Access to the U.S. electronically facilitated financial system is one of the strongest forms of soft power projection on Earth. >This is made possible through money transmission being regulated. >Part of being an authorized money transmitter is compliance with OFAC sanctions on a strict liability basis. OFAC sanctions are not constrained by by normal constraints on domestic law enforcement. You can end up on the OFAC list. You can appeal it, but the burden of proof is on you, and the Government does not have to share with you why you got put on there in the first place. >Sanctions are often diplomatic. Courts will not say the executive does not have standing, as it's enumerated right in the Constitution, that is the Federal Government's job. >Violation of sanctions as a U.S. citizen is criminal. While it is not necessarily practicable yet to ascertain which node originated a particular block, it is not impossible to sufficiently instrument enough of the network to make such determinations possible, and eith PoS tending to centralize, the value of setting up said monitoring to facilitate enforceability is high, even if only for investigative/intelligence community purposes. Remember, these are the people who brought you PRISM.* >Any violations of sanctions will be transparently evident on the blockchain. The receiving address of the value from the sanctioned address will be added to the SDN. >The overall network effect is such that no one that desires to do business in the U.S. will cash out your coin. >No technical impossibilities exists that will prevent this eventual outcome. The only X factor, is how much time it will take for the tooling to get there
  - 4y ago

JumpCrisscross 4y ago

> Treasury would probably prefer these freedom aren't even given This is how it always worked. Go back to the original articles and read the comments defending OFAC. The code was never sanctioned. The project was. The fact that the project involves an instance of code on an immutable blockchain is mumbo jumbo.

smsm42 4y ago

They'd probably need to get some law like DMCA that would prohibit such code, but they don't have it yet, so they don't have a leg to stand on with regard to proscribing the code. They'll probably get to asking for such law pretty soon though.