4 ms·

I read the sanctioned SDN List. Am I reading incorrectly that if someone merely created a new TC instance with new addresses and website, it would not violate

I read the sanctioned SDN List. Am I reading incorrectly that if someone merely created a new TC instance with new addresses and website, it would not violate sanctions? I don't see the sanction list sanction the actual code, nor the execution of the code, but IANAL. The SDN here just shows the associated addresses, the published contract instance, and tornado cash website, no? https://home.treasury.gov/policy-issues/financial-sanctions/recent-actions/20220808 https://home.treasury.gov/policy-issues/financial-sanctions/...

vorpalhex 4y ago
If you run the code in a way that nobody can interact with it.. that probably isn't a crime (not a lawyer). If you facilitate money laundering, that is still illegal.
- notch656a 4y ago
  >If you facilitate money laundering, that is still illegal. If that is your intent, then sure. But merely mixing funds does not meet the criteria for money laundering. The road crew who builds the interstate knows 100% it will be used for money laundering, yet builds it anyway and does nothing to stop it. (Same for guys at the gas station who sell the gas). Surely knowing money launderers use something isn't enough to be criminally culpable. >If you run the code in a way that nobody can interact with it. IANAL and not legal advice, but it looks to me though that a fresh published contract of TC to new addresses doesn't violate this SDN list, even if it interacts with others.
  - rmah 4y ago
    If you are moving money around on behalf of others and you have a reasonable belief that some of your users are Americans or will eventually deal with American financial institutions (pretty much everyone in the world), then you should have AML (Anti-Money Laundering) and KYC (Know Your Customer) processes in place. Not doing so is just asking for trouble. When you are eventually investigated by the authorities, saying "we didn't ask so we didn't know" is not considered a valid defense. More to the point, crypto mixers are obviously being used to hide the origin of funds. This is money laundering in the colloquial sense. Whether it reaches the level of criminality will obviously depend on a case by case basis. Running a mixer is, IMO, a very very dangerous road to go down.
    - staringback 4y ago
      Nobody using tornado cash is moving money around on behalf of others.
      - rmah 4y ago
        Tornado Cash is described as a decentralized crypto-mixing service. Given that description, all it did was move money around. Is this a mischaracterization?
        3np 4y ago
        Calling it a "service" might be a (frustratingly common) mischaracterization, yes.
        8note 4y ago
        that seems like a distinction crypto folks want to create to avoid liability, rather than a semantic one.
        3np 4y ago
        Look at the different stakeholders in the system. Who is the provider of what service? The fundamental separation and removal of custody and trust is precisely what makes something like Tornado Cash a completely different thing than a traditional tumbler / mixing service.
      - 3np 4y ago
        The relayers are. Relayers are a subset of TC users and are an optional part of the process.
    - everfree 4y ago
      Road builders do not actually move money around on behalf of others, and Tornado Cash developers do not actually move money around on behalf of others. They don't "run a mixer" or otherwise operate the Tornado Cash smart contract. They did provide an interface for interacting with it, but that's not really the issue in question. Tornado Cash runs autonomously on immutable code. Nobody can force the already-running code to start doing AML/KYC. In my eyes, you either argue that it was not against the law for the devs to publish the code, or you argue that code is not protected by the first amendment. There's not really an in-between.
  - salawat 4y ago
    Only in the sense that DoT has not looked into the matter long enough to figure out if somebody needs a sanctioning. If you do not comply with AML best practices, you'll still eventually be on the hook the first time a ne'er do well facilitates something through ya. Repeat that process till normal folks start catching on, or someone takes Confress by the hand, and you'll find the regulations come quicker than you think.
  - from 4y ago
    Treasury says mixing is money transmission so if you were a US person operating such a service you’d need a MSB license and a license for the states you operate in. Tornado Cash had no US persons operating it (arguably no one was operating it as it cannot be shutdown and does not take fees) and really no US nexus so they just used sanctions instead of criminal or civil charges to get their way.
salawat 4y ago
You cannot in any way facilitate the moving out of any denomination of value from the addressed on the SDN list. Moving value cross-chain is itself a violation of sanctions. If you start up a new Tornado.cash instance, you're still probably not going to get touched by the rest of the financial network. Risk departments are going to have dig into the details, and legal (if smart) will steer clear. Further, law enforcement will likely root out and make known to Treasury any additional instances of the same infrastructure they uncover, given that inevitably, the usual suspects will be running things through said channels until caught if they don't. ...And you will be hard pressed to find a judge that has the gumption to go so activist from the bench that they go against what Congress has already authorized.
- notch656a 4y ago
  >f you start up a new Tornado.cash instance, you're still probably not going to get touched by the rest of the financial network. This is what I'm referring to. In the hypothetical that someone tweaks TC to call it something besides Tornado Cash, and runs it with different addresses. It seems to me by the letter of the SDN, from a layman's perspective, it wouldn't violate sanction. IMO they should have sanctioned any execution of all forks of TC if their desired effect was to stop the service of TC.
  - rmah 4y ago
    They can't "sanction all forks". Sanctions are applied against people and organizations, not technologies. Criminal money laundering is still a crime. It doesn't matter if you use TC or not.
    - whatisweb3 4y ago
      This very sanction is against a tech called “Tornado Cash” which is not an organization or person. If somebody forks the protocol and renames it, and everybody uses it in place of TC, it will probably be under scrutiny by US treasury.
      - 4y ago

vorpalhex 4y ago

If you run the code in a way that nobody can interact with it.. that probably isn't a crime (not a lawyer). If you facilitate money laundering, that is still illegal.

notch656a 4y ago
>If you facilitate money laundering, that is still illegal. If that is your intent, then sure. But merely mixing funds does not meet the criteria for money laundering. The road crew who builds the interstate knows 100% it will be used for money laundering, yet builds it anyway and does nothing to stop it. (Same for guys at the gas station who sell the gas). Surely knowing money launderers use something isn't enough to be criminally culpable. >If you run the code in a way that nobody can interact with it. IANAL and not legal advice, but it looks to me though that a fresh published contract of TC to new addresses doesn't violate this SDN list, even if it interacts with others.
- rmah 4y ago
  If you are moving money around on behalf of others and you have a reasonable belief that some of your users are Americans or will eventually deal with American financial institutions (pretty much everyone in the world), then you should have AML (Anti-Money Laundering) and KYC (Know Your Customer) processes in place. Not doing so is just asking for trouble. When you are eventually investigated by the authorities, saying "we didn't ask so we didn't know" is not considered a valid defense. More to the point, crypto mixers are obviously being used to hide the origin of funds. This is money laundering in the colloquial sense. Whether it reaches the level of criminality will obviously depend on a case by case basis. Running a mixer is, IMO, a very very dangerous road to go down.
  - staringback 4y ago
    Nobody using tornado cash is moving money around on behalf of others.
    - rmah 4y ago
      Tornado Cash is described as a decentralized crypto-mixing service. Given that description, all it did was move money around. Is this a mischaracterization?
      - 3np 4y ago
        Calling it a "service" might be a (frustratingly common) mischaracterization, yes.
        8note 4y ago
        that seems like a distinction crypto folks want to create to avoid liability, rather than a semantic one.
        3np 4y ago
        Look at the different stakeholders in the system. Who is the provider of what service? The fundamental separation and removal of custody and trust is precisely what makes something like Tornado Cash a completely different thing than a traditional tumbler / mixing service.
    - 3np 4y ago
      The relayers are. Relayers are a subset of TC users and are an optional part of the process.
  - everfree 4y ago
    Road builders do not actually move money around on behalf of others, and Tornado Cash developers do not actually move money around on behalf of others. They don't "run a mixer" or otherwise operate the Tornado Cash smart contract. They did provide an interface for interacting with it, but that's not really the issue in question. Tornado Cash runs autonomously on immutable code. Nobody can force the already-running code to start doing AML/KYC. In my eyes, you either argue that it was not against the law for the devs to publish the code, or you argue that code is not protected by the first amendment. There's not really an in-between.
- salawat 4y ago
  Only in the sense that DoT has not looked into the matter long enough to figure out if somebody needs a sanctioning. If you do not comply with AML best practices, you'll still eventually be on the hook the first time a ne'er do well facilitates something through ya. Repeat that process till normal folks start catching on, or someone takes Confress by the hand, and you'll find the regulations come quicker than you think.
- from 4y ago
  Treasury says mixing is money transmission so if you were a US person operating such a service you’d need a MSB license and a license for the states you operate in. Tornado Cash had no US persons operating it (arguably no one was operating it as it cannot be shutdown and does not take fees) and really no US nexus so they just used sanctions instead of criminal or civil charges to get their way.

salawat 4y ago

You cannot in any way facilitate the moving out of any denomination of value from the addressed on the SDN list. Moving value cross-chain is itself a violation of sanctions. If you start up a new Tornado.cash instance, you're still probably not going to get touched by the rest of the financial network. Risk departments are going to have dig into the details, and legal (if smart) will steer clear. Further, law enforcement will likely root out and make known to Treasury any additional instances of the same infrastructure they uncover, given that inevitably, the usual suspects will be running things through said channels until caught if they don't. ...And you will be hard pressed to find a judge that has the gumption to go so activist from the bench that they go against what Congress has already authorized.

notch656a 4y ago
>f you start up a new Tornado.cash instance, you're still probably not going to get touched by the rest of the financial network. This is what I'm referring to. In the hypothetical that someone tweaks TC to call it something besides Tornado Cash, and runs it with different addresses. It seems to me by the letter of the SDN, from a layman's perspective, it wouldn't violate sanction. IMO they should have sanctioned any execution of all forks of TC if their desired effect was to stop the service of TC.
- rmah 4y ago
  They can't "sanction all forks". Sanctions are applied against people and organizations, not technologies. Criminal money laundering is still a crime. It doesn't matter if you use TC or not.
  - whatisweb3 4y ago
    This very sanction is against a tech called “Tornado Cash” which is not an organization or person. If somebody forks the protocol and renames it, and everybody uses it in place of TC, it will probably be under scrutiny by US treasury.
    - 4y ago