7 ms·

>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 la

>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.
  - JumpCrisscross 4y ago
    > Tornado Cash runs autonomously on immutable code. Nobody can force the already-running code to start doing AML/KYC The hypothetical involved creating “a new TC instance with new addresses and website.” That’s not already-running code. If you do that and then it’s used for money laundering and you do and don’t do all the things Tornado Cash did and didn’t, yes, obviously, we have that precedent.
    - everfree 4y ago
      Publishing a new TC instance can be done anonymously from anywhere in the world, by anyone who can follow the compilation instructions in the readme, so it's not really an interesting legal question in my opinion. I'm more interested in discussing the legality of publishing the source code in the first place (is it protected by the first amendment?) and the legal questions surrounding already-instantiated code.
      - vorpalhex 4y ago
        The treasury has your answer: Publish the code all you want. If you run it and don't follow KYC, you will be found guilty of money laundering.
        notch656a 4y ago
        The people 'running' the code are basically the Ethereum virtual mcahine nodes. That is to say, using your definition Ethereum comes crashing down because everyone running the ethereum virtual machine and this application, which still exists on the chain, are criminals guilty of running the code without KYC.
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.

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.
- JumpCrisscross 4y ago
  > Tornado Cash runs autonomously on immutable code. Nobody can force the already-running code to start doing AML/KYC The hypothetical involved creating “a new TC instance with new addresses and website.” That’s not already-running code. If you do that and then it’s used for money laundering and you do and don’t do all the things Tornado Cash did and didn’t, yes, obviously, we have that precedent.
  - everfree 4y ago
    Publishing a new TC instance can be done anonymously from anywhere in the world, by anyone who can follow the compilation instructions in the readme, so it's not really an interesting legal question in my opinion. I'm more interested in discussing the legality of publishing the source code in the first place (is it protected by the first amendment?) and the legal questions surrounding already-instantiated code.
    - vorpalhex 4y ago
      The treasury has your answer: Publish the code all you want. If you run it and don't follow KYC, you will be found guilty of money laundering.
      - notch656a 4y ago
        The people 'running' the code are basically the Ethereum virtual mcahine nodes. That is to say, using your definition Ethereum comes crashing down because everyone running the ethereum virtual machine and this application, which still exists on the chain, are criminals guilty of running the code without KYC.

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.