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An anonymous person donated 299 ETH from Tornado Cash to Redox OS

123 points by irusensei 4y ago

irusensei 4y ago
Developer doesn’t know what to do with a donation that size and might also have some legal problems moving those funds. https://twitter.com/jeremy_soller/status/1572350419594268673 https://twitter.com/jeremy_soller/status/1572350419594268673
- jmt_ 4y ago
  He resides in Colorado according to his Linkedin. I don't know a whole lot about crypto - is there anyway he can meaningfully use the donation given the Tornado Cash sanctions? Could just simply being in possession of Tornado Cash Ether give rise to legal problems for him even if he doesn't touch it? Even though it's quite a generous sum amount of money, can't help but wonder if it was sent with ill intentions or if the sender simply lives in a different country and didn't think about the US sanctions
  - renewiltord 4y ago
    No. If he doesn't touch it, he's fine. Everyone has been dusted by Tornado Cash tainted ETH so it's unlikely they'll go after him.
    - A4ET8a8uTh0 4y ago
      Not sure why you are bring downvoted as it is pretty close to Treasury recent FAQ[1] on dusting: "OFAC is aware of reports following the designation of Tornado Cash that certain U.S. persons may have received unsolicited and nominal amounts of virtual currency or other virtual assets from Tornado Cash, a practice commonly referred to as “dusting.” Technically, OFAC’s regulations would apply to these transactions. To the extent, however, these “dusting” transactions have no other sanctions nexus besides Tornado Cash, OFAC will not prioritize enforcement against the delayed receipt of initial blocking reports and subsequent annual reports of blocked property from such U.S. persons. For guidance related to filing an initial and annual report of blocked property, please see FAQs 49, 50, and 646, respectively, and 31 C.F.R. § 501.603. Please note that the annual filing requirement for 2022 applies only to persons holding blocked property as of June 30 of this year. Released on 09/13/2022 " The individuals that got ETH may have some reporting requirements, but OFAC seems to understand it is an effort to make enforcement complicated by design. [1]https://home.treasury.gov/policy-issues/financial-sanctions/faqs/added/2022-09-13 https://home.treasury.gov/policy-issues/financial-sanctions/...
      - treis 4y ago
        $400,000 worth of eth isn't "nominal" though.
        A4ET8a8uTh0 4y ago
        Yeah and that is why I think they may end up having to report it to OFAC anyway and keep submitting annual updates. As always, at this amount, I would consider asking a specialized attorney ( although, ever since Russia invaded Ukraine, they had their hands full ).
        kube-system 4y ago
        The treasury is using "nominal" to describe what the word "dusting" means... it is when someone sends small amounts of sanctioned crypto to a bunch of accounts. This is from an FAQ article that confirms: yes, even small amounts are in violation of sanction laws. If a $5 transaction breaks the law, then $400,000 also does.
      - bee_rider 4y ago
        I think they are being downvoted because "not touching it" is not the end of the required action. It is the first step toward getting in compliance. The FAQ is saying "don't freak out, here are some forms to fill out to start straightening out this mess" I think.
    - chizhik-pyzhik 4y ago
      It's already been touched, the funds were moved shortly after being received
      - jmt_ 4y ago
        If he reports all relevant transactions involving this Ether to OFAC, will he avoid legal repercussions? I noticed a commenter on Twitter brought up the Tornado Cash issue so I wonder if he didn't know before he moved it, because why else would he move sanctioned crypto. Even though OFAC decided to not enforce "nominal" transactions, ~$400k worth of Ether is certainly not nominal so I would guess he needs to cover his ass ASAP.
  - kube-system 4y ago
    (edit: If the money is from Tornado Cash), the money is sanctioned, he has to block it from being used anywhere and he must report it within 10 days according to the law (although the treasury realizes that many people receiving this money don't have legal compliance on staff and so they're cutting people slack) > U.S. persons may have received unsolicited and nominal amounts of virtual currency [...] from Tornado Cash, [...] Technically, OFAC’s regulations would apply to these transactions. > Once a U.S. person determines that they hold virtual currency that is required to be blocked pursuant to OFAC's regulations, the U.S. person must deny all parties access to that virtual currency, ensure that they comply with OFAC regulations related to the holding and reporting of blocked assets, and implement controls that align with a risk-based approach. > 31 C.F.R. Parts §§501.603 and 501.604 require blocking and reject reports to be submitted to OFAC within 10 business days > A report of blocked property is to be submitted annually by September 30 https://home.treasury.gov/policy-issues/financial-sanctions/faqs/1078 https://home.treasury.gov/policy-issues/financial-sanctions/... The only thing that was donated here is a legal compliance headache that will continue for years to come.
    - deleted 4y ago
      [deleted]
    - toomuchtodo 4y ago
      I appreciate OFAC being reasonable; it’d be nice if they used Chainalysis to track the digital asset movement and give folks a way to tag their wallet with AML/KYC info for automated compliance purposes. These are public ledgers after all, the reporting does itself for the most part. Can you send the asset to an OFAC address for seizure and custody to wipe your hands of the issue?
      - hgsgm 4y ago
    - ram4jesus 4y ago
      I was thinking if I was receiving this Donation, the amount of stress and anxiety it would cost me in the aggregate would surpass any kind of monetary benefit.
  - colesantiago 4y ago
    Absolutely not. Once he touches this laundered ETH, he’ll face a whole host of legal issues. I’m assuming that the IRS and all the other relevant authorities already know about this and are ready to pounce on Redox once they touch that Tornado ETH. It is worth just sending that tainted ETH to a dead wallet to avoid all that trouble.
    - speed_spread 4y ago
      Could it be staked out so at least money can be derived from the "interests"?
    - systemvoltage 4y ago
      Definitely, IRS is a force to reckon with.
- foobarian 4y ago
  Interesting attack: find a digital currency recognized by the IRS that is, for whatever reason, impossible to cash out, and donate a giant amount to target of choice.
  - delecti 4y ago
    That's slightly limited by the fact that they'd probably need a wallet to begin with. Like, I couldn't be the target of an ETH bomb because I don't have any ethereum wallets. Receiving too big of a donation seems like not the worst problem if you were already open to receiving donations in that currency.
    - rvcdbn 4y ago
      You don’t need a wallet to be a victim of this. For example, someone could create an address only you can access with your Github public SSH key or the TLS public key of the project website (any public key that only you have the private key to will work).
      - bee_rider 4y ago
        This seems like the sort of thing we'll need some cases to resolve. If someone hides some valuable assets somewhere on your property and without telling you, presumably the IRS has some less-painful way of resolving this as long as you make a good faith effort to do so as soon as you become aware of it.
      - Macha 4y ago
        This was part of the big gittip controversy a few years ago where open source projects didn't want to do the tax paperwork they were now obligated to do by gittip holding funds in their name for like $50/year.
      - moolcool 4y ago
        Why would the "victim" care (or even find out about) this "attack"? My understanding is that because eth is fungible, it would poison an existing wallet with funds in it. I.e. if you have $5 in coins, and I give you $5 more in stolen coins, your entire coinpurse is essentially tainted. Your example would just be giving somebody a tainted wallet. Worst case scenario, you cycle your keys.
- Scarbutt 4y ago
  Wish I had that problem :)
kube-system 4y ago
Looks like the sanctions are causing some wealthy Tornado Cash users to change their spending habits.
Jamie9912 4y ago
Aaand its been moved into a Coinbase wallet https://etherscan.io/tx/0xb96a793fbf83ff0b729a12288566f26ed560010c933b574b6f0c09bd6fe76c0f https://etherscan.io/tx/0xb96a793fbf83ff0b729a12288566f26ed5...
- yieldcrv 4y ago
  cue: Coinbase blocked my account without explanation! from what I can tell, even if you got a license or reported to the Treasury, crypto exchanges and crypto services will auto-block you anyway and aren't prepared for exceptions and edge cases.
  - from 4y ago
    Similarly, the VTB bank case recently was interestingly. VTB was sued in some complaint about the downing of the MH-17 flight but despite OFAC providing an exemption for legal services the law firm they chose couldn't get any bank to process their payment. Maybe some sharp legal mind will argue that sanctions have a chilling effect that can violate the accused's right to counsel.
    - yieldcrv 4y ago
      a good lawyer knows the law a great lawyer knows the judge
- snovv_crash 4y ago
  Apparently it is being cashed out and sent to OFAC
- px43 4y ago
  This is really the ideal move. Let Coinbase lawyers figure it out. They have the legal expertise and better resources to determine potential connections to crime than anyone else does. If Coinbase seizes the money, that's fine. If they let him keep it, then there's no better way to cash out than through Coinbase. It's going to generate an automatic love letter to the IRS with all the details of the transactions, and he'll be taxed appropriately.
speedylight 4y ago
See all it takes is being sanctioned by the treasury to bring out the good in people. On a more serious note though can he use the funds at all? I imagine even sending it back would be a violation of the sanction.
- colechristensen 4y ago
  That’s the kind of thing where you get a good lawyer to have a conversation with the state followed by a lawsuit to get the ambiguous question turned into case law.
  - speedylight 4y ago
    So who would actually be the defendant in such a case?
    - colechristensen 4y ago
      Probably the US Treasury department which did the sanctioning or whomever else is trying to stop you from using the funds. Basically whoever says "no" when you start the conversation.
uup 4y ago
I wonder if the Treasury will ever go after people running Eth validators. Storage on blockchain, thus far, has been too expensive to store significant amounts of copyrighted material. But you have to wonder what would happen if the blockchain stored serious amounts of material that was illegal in some form, e.g. currency from a sanctioned system like Tornado Cash or a collection of Disney movies.
- joyfylbanana 4y ago
  The information on the blockchain is not illegal. It is not illegal to store the sanctioned addresses or tornaco cash smart contract source code. What is illegal is spending those funds, or allowing customers to transact with them. In fact, you need the addresses and contract details to block those transactions. Copyrighted material on blockchain has been discussed many times, it is just not viable attack because blockchain space is crazy expensive. There has been various data uploaded to the blockchain but you also need scripts to extract that data, so it also raises the question if that is even that accessible data.
  - uup 4y ago
    > The information on the blockchain is not illegal. Validators aren't just storing the information. They're actively processing transactions and getting paid to do it. > Copyrighted material on blockchain has been discussed many times, it is just not viable attack because blockchain space is crazy expensive. That's not a very satisfying conclusion to the topic
  - zmgsabst 4y ago
    A random internet search implied a 20KiB image would be $1k-5k. That’s expensive, but not impossible for a stunt.
    - Asraelite 4y ago
      Nevermind copyrighted material, what would happen if you got child porn on there?
scottiebarnes 4y ago
Seems impractical to expect end users to monitor the history of where money sent to them comes from. Would expect enforcement to be at the currency exchange point.
- PKop 4y ago
  >Seems impractical Of course. Making it impractical through enforcement of laws will benefit governments efforts to crush crypto, no? >Would expect Only if you believed government wanted crypto to succeed, yes?
- yieldcrv 4y ago
  users should just get used to recreating their own transaction obfuscation, mostly to avoid getting flagged at exchanges what someone on twitter wrote is pretty apt: deposit the Ether in AAVE to borrow USDC, move the USDC to another address and send that to Coinbase to cash out pretty much just walk away from the deposited Ether, let that get collateral called eventually. The protocol can enjoy its sanctioned money.
  - rnk 4y ago
    If you purchase eth now, how can you be sure you don't have eth that came from tornado or some other prescribed system? If I buy through a reputable seller, say coinbase, will they be able to certify my crypto is valid?
    - cypress66 4y ago
      Most eth will be connected in some shape or form to TC. It's just whatever arbitrary number of degrees of separation you consider related to TC.
- kube-system 4y ago
  Isn't the whole point of cryptocurrency to remove any third parties from the transaction? You can't have your cake and eat it too.
- 4y ago
jrm4 4y ago
MIT License? For me that drastically increases the "potentially shady" factor.
- jrm4 4y ago
  No comments on these downvotes? Okay, I'll start. Moneyed effort on a Linux replacement for the long term purpose of locking something back down.
Smithalicious 4y ago
Absolutely tragic that the US government's war on anonymous transactions is getting in the way of FOSS receiving donations here. I presume the donations itself is an attempt to make a statement, and I applaud it. Make people feel the impact of this attempt of absolute financial control without hurting them. I hope the developer can get access to the funds in the end!
- ram4jesus 4y ago
  If someone donated me a brand new mid-engine Corvette, it would be a huge headache because I couldn't afford the taxes & maintenance. I think in this case, FOSS would stand to gain more by not receiving money-laundered transactions which, as someone else pointed out in this discussion, would create a compliance nightmare. To put it this way: would you accept 1,000 dollars from me if it would take you 100 hours of your life to receive?
  - mrtranscendence 4y ago
    I suppose that in this case the project received enough money to hire two lawyers to deal with it full time for a year, so as long as there's a chance it could still be worth it. I'd put the odds pretty low, though.
  - Dylan16807 4y ago
    If someone gives you a brand new car, and you really don't want to be bothered with it, I think you could arrange a sale for 2/3 its value in a couple hours. > To put it this way: would you accept 1,000 dollars from me if it would take you 100 hours of your life to receive? Does that really apply here? If this money can't be touched, then it's a minor time sink with zero benefit. If there is a way to dump in 100 hours and extract the money, it's worth it because it's so much. That analogy is more fitting to a 1 ETH donation.
  - Ajedi32 4y ago
    Right, and that's the point. If an open source project can't receive an anonymous donation without a "compliance nightmare", then what does that say about the laws and regulations which created that nightmare in the first place? Keep in mind that there is, as of right now, no evidence that this cash was "laundered" or in any way associated with any nefarious activity. It's merely anonymous.
f38zf5vdt 4y ago
The user was alerted to this fact, sent it to Coinbase, liquidated it to USD, and is in the process of sending that to the OFAC. https://twitter.com/jeremy_soller/status/1573386439941029888 https://twitter.com/jeremy_soller/status/1573386439941029888
- RyanShook 4y ago
  What happens to digital currency confiscated by the government? Do they cash it out or does it just sit in a wallet somewhere?
  - kube-system 4y ago
    In the past I've seen articles where they auction it off. I imagine it depends on the reason it is seized and which department it is.
neogodless 4y ago
Discussed 2 days ago: https://news.ycombinator.com/item?id=32923693 https://news.ycombinator.com/item?id=32923693 - 119 comments
avnfish 4y ago
Putting the legal discussion to one side, interestingly the donor signed a UTF-8 message in one of his transactions. It reads: "Qubes address? GrapheneOS address?". Maybe implying he wants to give similar amounts to those two projects as well? Source: https://etherscan.io/tx/0xca5bb04204f446f73a510ea02b2bd7c01e16b58b1d16532a2a1be90d82820297 https://etherscan.io/tx/0xca5bb04204f446f73a510ea02b2bd7c01e...
- throwprivateoo 4y ago
  Do these products get written faster with more money? More people? It seems what they need is users.
  - flerchin 4y ago
    Marketing would help to drive users, yes?
    - throwprivateoo 4y ago
      I agree. Although $300,000 is a drop in the bucket for paid advertising. Yet here we are talking about these things - Qubes, whatever this is... Then again what is the CTA? So puzzling.
      - deleted 4y ago
        [deleted]
  - cypress66 4y ago
    Of course. It's the difference between a hobby project that you spend your spare time on, and a full time job.
    - birdyrooster 4y ago
      Giving money for the project must be someone trying to kill it off
  - 4y ago
tmpz22 4y ago
This large donation really changes the dynamics of KYC laws. It’s absurd we don’t dissolve our legal system so transactions like this can happen on occasion.
- heavenlyblue 4y ago
  There was recently a post about the amount of fraud that is acceptable for payment processors. For example in that case, a certain amount of fraud is acceptable because without it the payment procedures would never be at the exact equilibrium between discomfort and fraud percentage. In such a scenario we try to enforce so KYC so much that we competely disregard the good that lack of KYC could do for us. What if this is drug money being used for actual good things? In some ways you couod say that the system is working: sometimes ignoring the law brings good to the society. I am bringing here the same argument that would be used towards never prosecuting people for crimes that were discovered when someone has already reported a crime: i.e. if someone submits a DNA sample due to being raped can not be prosecuted for petty crime that was discovered due to it as that would make people in that situation do even more crime.
  - jack_pp 4y ago
    As others pointed out if this is allowed then OS projects will start to be used for money laundering and that's probably bad for open source
- jjtheblunt 4y ago
  Didn't the legal system arise from anarchy where transactions like this were the norm, hundreds to thousands of years ago?
deleted 4y ago
[deleted]
olalonde 4y ago
IANAL but I feel there's a lot of misinformation in this thread. There is no such thing as "tainted" ETH. The ETH was transferred from address 0x4B6275DB08c61aeFBa7bADaaE93aa853e377CddB which is not a sanctioned address[0]. It is therefore fine to receive and spend that ETH. It is possible that the donator violated US sanctions by taking it out of the Tornado Cash smart contract if: 1) they are a US person/under US jurisdiction 2) they are the same person that withdrew them from the Tornado Cash contract (not necessarily true). Additionally, businesses which are not "money transmitters" (e.g. banks, crypto exchanges, etc.) are not subject to KYC regulations and are under no legal obligation to know the identity of their customers or donators. Finally, I'd like to add that privacy-enhancing smart contracts like Tornado Cash have legitimate uses and were used for legitimate reasons, notably by Ethereum cofounder Vitalik Buterin who probably didn't like everyone observing and commenting on his Ethereum spending habits. I've seen a lot of "crypto critics" simultaneously criticize the transparency of blockchains and smart contracts like Tornado Cash which fix the problem... [0] https://home.treasury.gov/policy-issues/financial-sanctions/recent-actions/20220808 https://home.treasury.gov/policy-issues/financial-sanctions/...

123 points by irusensei 4y ago

Developer doesn’t know what to do with a donation that size and might also have some legal problems moving those funds. https://twitter.com/jeremy_soller/status/1572350419594268673 https://twitter.com/jeremy_soller/status/1572350419594268673

jmt_ 4y ago
He resides in Colorado according to his Linkedin. I don't know a whole lot about crypto - is there anyway he can meaningfully use the donation given the Tornado Cash sanctions? Could just simply being in possession of Tornado Cash Ether give rise to legal problems for him even if he doesn't touch it? Even though it's quite a generous sum amount of money, can't help but wonder if it was sent with ill intentions or if the sender simply lives in a different country and didn't think about the US sanctions
- renewiltord 4y ago
  No. If he doesn't touch it, he's fine. Everyone has been dusted by Tornado Cash tainted ETH so it's unlikely they'll go after him.
  - A4ET8a8uTh0 4y ago
    Not sure why you are bring downvoted as it is pretty close to Treasury recent FAQ[1] on dusting: "OFAC is aware of reports following the designation of Tornado Cash that certain U.S. persons may have received unsolicited and nominal amounts of virtual currency or other virtual assets from Tornado Cash, a practice commonly referred to as “dusting.” Technically, OFAC’s regulations would apply to these transactions. To the extent, however, these “dusting” transactions have no other sanctions nexus besides Tornado Cash, OFAC will not prioritize enforcement against the delayed receipt of initial blocking reports and subsequent annual reports of blocked property from such U.S. persons. For guidance related to filing an initial and annual report of blocked property, please see FAQs 49, 50, and 646, respectively, and 31 C.F.R. § 501.603. Please note that the annual filing requirement for 2022 applies only to persons holding blocked property as of June 30 of this year. Released on 09/13/2022 " The individuals that got ETH may have some reporting requirements, but OFAC seems to understand it is an effort to make enforcement complicated by design. [1]https://home.treasury.gov/policy-issues/financial-sanctions/faqs/added/2022-09-13 https://home.treasury.gov/policy-issues/financial-sanctions/...
    - treis 4y ago
      $400,000 worth of eth isn't "nominal" though.
      - A4ET8a8uTh0 4y ago
        Yeah and that is why I think they may end up having to report it to OFAC anyway and keep submitting annual updates. As always, at this amount, I would consider asking a specialized attorney ( although, ever since Russia invaded Ukraine, they had their hands full ).
      - kube-system 4y ago
        The treasury is using "nominal" to describe what the word "dusting" means... it is when someone sends small amounts of sanctioned crypto to a bunch of accounts. This is from an FAQ article that confirms: yes, even small amounts are in violation of sanction laws. If a $5 transaction breaks the law, then $400,000 also does.
    - bee_rider 4y ago
      I think they are being downvoted because "not touching it" is not the end of the required action. It is the first step toward getting in compliance. The FAQ is saying "don't freak out, here are some forms to fill out to start straightening out this mess" I think.
  - chizhik-pyzhik 4y ago
    It's already been touched, the funds were moved shortly after being received
    - jmt_ 4y ago
      If he reports all relevant transactions involving this Ether to OFAC, will he avoid legal repercussions? I noticed a commenter on Twitter brought up the Tornado Cash issue so I wonder if he didn't know before he moved it, because why else would he move sanctioned crypto. Even though OFAC decided to not enforce "nominal" transactions, ~$400k worth of Ether is certainly not nominal so I would guess he needs to cover his ass ASAP.
- kube-system 4y ago
  (edit: If the money is from Tornado Cash), the money is sanctioned, he has to block it from being used anywhere and he must report it within 10 days according to the law (although the treasury realizes that many people receiving this money don't have legal compliance on staff and so they're cutting people slack) > U.S. persons may have received unsolicited and nominal amounts of virtual currency [...] from Tornado Cash, [...] Technically, OFAC’s regulations would apply to these transactions. > Once a U.S. person determines that they hold virtual currency that is required to be blocked pursuant to OFAC's regulations, the U.S. person must deny all parties access to that virtual currency, ensure that they comply with OFAC regulations related to the holding and reporting of blocked assets, and implement controls that align with a risk-based approach. > 31 C.F.R. Parts §§501.603 and 501.604 require blocking and reject reports to be submitted to OFAC within 10 business days > A report of blocked property is to be submitted annually by September 30 https://home.treasury.gov/policy-issues/financial-sanctions/faqs/1078 https://home.treasury.gov/policy-issues/financial-sanctions/... The only thing that was donated here is a legal compliance headache that will continue for years to come.
  - deleted 4y ago
    [deleted]
  - toomuchtodo 4y ago
    I appreciate OFAC being reasonable; it’d be nice if they used Chainalysis to track the digital asset movement and give folks a way to tag their wallet with AML/KYC info for automated compliance purposes. These are public ledgers after all, the reporting does itself for the most part. Can you send the asset to an OFAC address for seizure and custody to wipe your hands of the issue?
    - hgsgm 4y ago
  - ram4jesus 4y ago
    I was thinking if I was receiving this Donation, the amount of stress and anxiety it would cost me in the aggregate would surpass any kind of monetary benefit.
- colesantiago 4y ago
  Absolutely not. Once he touches this laundered ETH, he’ll face a whole host of legal issues. I’m assuming that the IRS and all the other relevant authorities already know about this and are ready to pounce on Redox once they touch that Tornado ETH. It is worth just sending that tainted ETH to a dead wallet to avoid all that trouble.
  - speed_spread 4y ago
    Could it be staked out so at least money can be derived from the "interests"?
  - systemvoltage 4y ago
    Definitely, IRS is a force to reckon with.
foobarian 4y ago
Interesting attack: find a digital currency recognized by the IRS that is, for whatever reason, impossible to cash out, and donate a giant amount to target of choice.
- delecti 4y ago
  That's slightly limited by the fact that they'd probably need a wallet to begin with. Like, I couldn't be the target of an ETH bomb because I don't have any ethereum wallets. Receiving too big of a donation seems like not the worst problem if you were already open to receiving donations in that currency.
  - rvcdbn 4y ago
    You don’t need a wallet to be a victim of this. For example, someone could create an address only you can access with your Github public SSH key or the TLS public key of the project website (any public key that only you have the private key to will work).
    - bee_rider 4y ago
      This seems like the sort of thing we'll need some cases to resolve. If someone hides some valuable assets somewhere on your property and without telling you, presumably the IRS has some less-painful way of resolving this as long as you make a good faith effort to do so as soon as you become aware of it.
    - Macha 4y ago
      This was part of the big gittip controversy a few years ago where open source projects didn't want to do the tax paperwork they were now obligated to do by gittip holding funds in their name for like $50/year.
    - moolcool 4y ago
      Why would the "victim" care (or even find out about) this "attack"? My understanding is that because eth is fungible, it would poison an existing wallet with funds in it. I.e. if you have $5 in coins, and I give you $5 more in stolen coins, your entire coinpurse is essentially tainted. Your example would just be giving somebody a tainted wallet. Worst case scenario, you cycle your keys.
Scarbutt 4y ago
Wish I had that problem :)

kube-system 4y ago

Looks like the sanctions are causing some wealthy Tornado Cash users to change their spending habits.

Jamie9912 4y ago

Aaand its been moved into a Coinbase wallet https://etherscan.io/tx/0xb96a793fbf83ff0b729a12288566f26ed560010c933b574b6f0c09bd6fe76c0f https://etherscan.io/tx/0xb96a793fbf83ff0b729a12288566f26ed5...

yieldcrv 4y ago
cue: Coinbase blocked my account without explanation! from what I can tell, even if you got a license or reported to the Treasury, crypto exchanges and crypto services will auto-block you anyway and aren't prepared for exceptions and edge cases.
- from 4y ago
  Similarly, the VTB bank case recently was interestingly. VTB was sued in some complaint about the downing of the MH-17 flight but despite OFAC providing an exemption for legal services the law firm they chose couldn't get any bank to process their payment. Maybe some sharp legal mind will argue that sanctions have a chilling effect that can violate the accused's right to counsel.
  - yieldcrv 4y ago
    a good lawyer knows the law a great lawyer knows the judge
snovv_crash 4y ago
Apparently it is being cashed out and sent to OFAC
px43 4y ago
This is really the ideal move. Let Coinbase lawyers figure it out. They have the legal expertise and better resources to determine potential connections to crime than anyone else does. If Coinbase seizes the money, that's fine. If they let him keep it, then there's no better way to cash out than through Coinbase. It's going to generate an automatic love letter to the IRS with all the details of the transactions, and he'll be taxed appropriately.

speedylight 4y ago

See all it takes is being sanctioned by the treasury to bring out the good in people. On a more serious note though can he use the funds at all? I imagine even sending it back would be a violation of the sanction.

colechristensen 4y ago
That’s the kind of thing where you get a good lawyer to have a conversation with the state followed by a lawsuit to get the ambiguous question turned into case law.
- speedylight 4y ago
  So who would actually be the defendant in such a case?
  - colechristensen 4y ago
    Probably the US Treasury department which did the sanctioning or whomever else is trying to stop you from using the funds. Basically whoever says "no" when you start the conversation.

uup 4y ago

I wonder if the Treasury will ever go after people running Eth validators. Storage on blockchain, thus far, has been too expensive to store significant amounts of copyrighted material. But you have to wonder what would happen if the blockchain stored serious amounts of material that was illegal in some form, e.g. currency from a sanctioned system like Tornado Cash or a collection of Disney movies.

joyfylbanana 4y ago
The information on the blockchain is not illegal. It is not illegal to store the sanctioned addresses or tornaco cash smart contract source code. What is illegal is spending those funds, or allowing customers to transact with them. In fact, you need the addresses and contract details to block those transactions. Copyrighted material on blockchain has been discussed many times, it is just not viable attack because blockchain space is crazy expensive. There has been various data uploaded to the blockchain but you also need scripts to extract that data, so it also raises the question if that is even that accessible data.
- uup 4y ago
  > The information on the blockchain is not illegal. Validators aren't just storing the information. They're actively processing transactions and getting paid to do it. > Copyrighted material on blockchain has been discussed many times, it is just not viable attack because blockchain space is crazy expensive. That's not a very satisfying conclusion to the topic
- zmgsabst 4y ago
  A random internet search implied a 20KiB image would be $1k-5k. That’s expensive, but not impossible for a stunt.
  - Asraelite 4y ago
    Nevermind copyrighted material, what would happen if you got child porn on there?

scottiebarnes 4y ago

Seems impractical to expect end users to monitor the history of where money sent to them comes from. Would expect enforcement to be at the currency exchange point.

PKop 4y ago
>Seems impractical Of course. Making it impractical through enforcement of laws will benefit governments efforts to crush crypto, no? >Would expect Only if you believed government wanted crypto to succeed, yes?
yieldcrv 4y ago
users should just get used to recreating their own transaction obfuscation, mostly to avoid getting flagged at exchanges what someone on twitter wrote is pretty apt: deposit the Ether in AAVE to borrow USDC, move the USDC to another address and send that to Coinbase to cash out pretty much just walk away from the deposited Ether, let that get collateral called eventually. The protocol can enjoy its sanctioned money.
- rnk 4y ago
  If you purchase eth now, how can you be sure you don't have eth that came from tornado or some other prescribed system? If I buy through a reputable seller, say coinbase, will they be able to certify my crypto is valid?
  - cypress66 4y ago
    Most eth will be connected in some shape or form to TC. It's just whatever arbitrary number of degrees of separation you consider related to TC.
kube-system 4y ago
Isn't the whole point of cryptocurrency to remove any third parties from the transaction? You can't have your cake and eat it too.
4y ago

jrm4 4y ago

MIT License? For me that drastically increases the "potentially shady" factor.

jrm4 4y ago
No comments on these downvotes? Okay, I'll start. Moneyed effort on a Linux replacement for the long term purpose of locking something back down.

Smithalicious 4y ago

Absolutely tragic that the US government's war on anonymous transactions is getting in the way of FOSS receiving donations here. I presume the donations itself is an attempt to make a statement, and I applaud it. Make people feel the impact of this attempt of absolute financial control without hurting them. I hope the developer can get access to the funds in the end!

ram4jesus 4y ago
If someone donated me a brand new mid-engine Corvette, it would be a huge headache because I couldn't afford the taxes & maintenance. I think in this case, FOSS would stand to gain more by not receiving money-laundered transactions which, as someone else pointed out in this discussion, would create a compliance nightmare. To put it this way: would you accept 1,000 dollars from me if it would take you 100 hours of your life to receive?
- mrtranscendence 4y ago
  I suppose that in this case the project received enough money to hire two lawyers to deal with it full time for a year, so as long as there's a chance it could still be worth it. I'd put the odds pretty low, though.
- Dylan16807 4y ago
  If someone gives you a brand new car, and you really don't want to be bothered with it, I think you could arrange a sale for 2/3 its value in a couple hours. > To put it this way: would you accept 1,000 dollars from me if it would take you 100 hours of your life to receive? Does that really apply here? If this money can't be touched, then it's a minor time sink with zero benefit. If there is a way to dump in 100 hours and extract the money, it's worth it because it's so much. That analogy is more fitting to a 1 ETH donation.
- Ajedi32 4y ago
  Right, and that's the point. If an open source project can't receive an anonymous donation without a "compliance nightmare", then what does that say about the laws and regulations which created that nightmare in the first place? Keep in mind that there is, as of right now, no evidence that this cash was "laundered" or in any way associated with any nefarious activity. It's merely anonymous.

f38zf5vdt 4y ago

The user was alerted to this fact, sent it to Coinbase, liquidated it to USD, and is in the process of sending that to the OFAC. https://twitter.com/jeremy_soller/status/1573386439941029888 https://twitter.com/jeremy_soller/status/1573386439941029888

RyanShook 4y ago
What happens to digital currency confiscated by the government? Do they cash it out or does it just sit in a wallet somewhere?
- kube-system 4y ago
  In the past I've seen articles where they auction it off. I imagine it depends on the reason it is seized and which department it is.

neogodless 4y ago

Discussed 2 days ago: https://news.ycombinator.com/item?id=32923693 https://news.ycombinator.com/item?id=32923693 - 119 comments

avnfish 4y ago

Putting the legal discussion to one side, interestingly the donor signed a UTF-8 message in one of his transactions. It reads: "Qubes address? GrapheneOS address?". Maybe implying he wants to give similar amounts to those two projects as well? Source: https://etherscan.io/tx/0xca5bb04204f446f73a510ea02b2bd7c01e16b58b1d16532a2a1be90d82820297 https://etherscan.io/tx/0xca5bb04204f446f73a510ea02b2bd7c01e...

throwprivateoo 4y ago
Do these products get written faster with more money? More people? It seems what they need is users.
- flerchin 4y ago
  Marketing would help to drive users, yes?
  - throwprivateoo 4y ago
    I agree. Although $300,000 is a drop in the bucket for paid advertising. Yet here we are talking about these things - Qubes, whatever this is... Then again what is the CTA? So puzzling.
    - deleted 4y ago
      [deleted]
- cypress66 4y ago
  Of course. It's the difference between a hobby project that you spend your spare time on, and a full time job.
  - birdyrooster 4y ago
    Giving money for the project must be someone trying to kill it off
- 4y ago

tmpz22 4y ago

This large donation really changes the dynamics of KYC laws. It’s absurd we don’t dissolve our legal system so transactions like this can happen on occasion.

heavenlyblue 4y ago
There was recently a post about the amount of fraud that is acceptable for payment processors. For example in that case, a certain amount of fraud is acceptable because without it the payment procedures would never be at the exact equilibrium between discomfort and fraud percentage. In such a scenario we try to enforce so KYC so much that we competely disregard the good that lack of KYC could do for us. What if this is drug money being used for actual good things? In some ways you couod say that the system is working: sometimes ignoring the law brings good to the society. I am bringing here the same argument that would be used towards never prosecuting people for crimes that were discovered when someone has already reported a crime: i.e. if someone submits a DNA sample due to being raped can not be prosecuted for petty crime that was discovered due to it as that would make people in that situation do even more crime.
- jack_pp 4y ago
  As others pointed out if this is allowed then OS projects will start to be used for money laundering and that's probably bad for open source
jjtheblunt 4y ago
Didn't the legal system arise from anarchy where transactions like this were the norm, hundreds to thousands of years ago?

deleted 4y ago

[deleted]

olalonde 4y ago

IANAL but I feel there's a lot of misinformation in this thread. There is no such thing as "tainted" ETH. The ETH was transferred from address 0x4B6275DB08c61aeFBa7bADaaE93aa853e377CddB which is not a sanctioned address[0]. It is therefore fine to receive and spend that ETH. It is possible that the donator violated US sanctions by taking it out of the Tornado Cash smart contract if: 1) they are a US person/under US jurisdiction 2) they are the same person that withdrew them from the Tornado Cash contract (not necessarily true). Additionally, businesses which are not "money transmitters" (e.g. banks, crypto exchanges, etc.) are not subject to KYC regulations and are under no legal obligation to know the identity of their customers or donators. Finally, I'd like to add that privacy-enhancing smart contracts like Tornado Cash have legitimate uses and were used for legitimate reasons, notably by Ethereum cofounder Vitalik Buterin who probably didn't like everyone observing and commenting on his Ethereum spending habits. I've seen a lot of "crypto critics" simultaneously criticize the transparency of blockchains and smart contracts like Tornado Cash which fix the problem... [0] https://home.treasury.gov/policy-issues/financial-sanctions/recent-actions/20220808 https://home.treasury.gov/policy-issues/financial-sanctions/...