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Well that's a terrifying precedent they are trying to set. Tornado Cash devs blocked known OFAC sanctioned addresses or associated addresses from interacting w

Well that's a terrifying precedent they are trying to set. Tornado Cash devs blocked known OFAC sanctioned addresses or associated addresses from interacting with the service yet they are still being put on the hook for people hiding their identity to attempt to bypass those sanctions.

woodruffw 3y ago
I don't think this is unprecedented: the USG's reasoning (appears) to be that all actions here were ultimately the product of human behavior. Put another way: it's still a crime to kick puppies, even if you only indirectly kick puppies through your newly-invented fully-automatic Puppy Kicker 3000. Edit: to refine the analogy: it doesn't stop being a Puppy Kicker 3000 just because you add a screening phase that eliminates puppies designated by the American Kennel Club.
- nabakin 3y ago
  Your analogy would only make sense if Tornado Cash (Puppy Kicker 3000) was created for the purpose of money laundering (kicking puppies), but it seems like it was created for consumer privacy reasons.
  - CPLX 3y ago
    Privacy for consumers of money transmitting services is called money laundering.
    - Ar-Curunir 3y ago
      Seems like cash users (everyone) and cash issuers (the government) are money launderers under this exceedingly broad definition.
      - CPLX 3y ago
        Transmitting cash for others without reporting it would in fact make you a money launderer as well.
      - spacemanspiff01 3y ago
        Try doing things with large amounts of cash, and see what happens. Take a million dollars and buy something with it. Even just depositing 10k in a bank account gets reported to the feds, and possibly investigated (And using lower amounts is illegal under structuring.) That's setting aside the instances of civil asset forfeiture where money is seized because driving with large amounts of cash is assumed to be the product of a crime. So yeah, whether it's a good policy or not, it definitely seems to be the view.
    - nabakin 3y ago
      No it is not. Maybe you need to look up the definition of money laundering.
  - JohnFen 3y ago
    I think what it seems to you is different from what it seems to others. But this is the reason we have a court system -- a judge will end up deciding if TC intentionally allowed for money laundering and if TC violated KYC/AML laws.
    - nabakin 3y ago
      Sure and if their intent was to make a tool for money laundering or they attempted to subvert the law, I'm all for it
- sneak 3y ago
  If someone took the Tornado Cash contract source code and redeployed it on Ethereum under a new contract address today and people began using it, do you think someone deploying such a contract should face similar charges? Should the original developers face additional charges for that? What if the original developers only published the contracts but never deployed them on Ethereum, leaving that up to someone else to do? Is it the author or the deployer or the user who is liable? I mean, someone has to be liable if it didn't exist before and then it did, but if it's the author and not the deployer, you could be charged for code you wrote entirely offline and published to GitHub (if someone else later deploys it and it sees use).
  - woodruffw 3y ago
    My “should” doesn’t enter into it. What matters is whether it’s indistinguishable from a criminal enterprise, which it is.
  - thisgoesnowhere 3y ago
    In this case the "devs" are the owners and operators and they profit on the contract being run. The answer to all of your questions is the same. When you run this code to facilitate money laundering the deployer gets in trouble and that's how it should be I can't imagine how else it could work.
  - GauntletWizard 3y ago
    Yes, no, deployer. The code is absolutely free speech, the application of it is not. I can sell you a book that says how to circumvent financial controls, I can even give a talk about circumventing financial controls, what I can't do is fly to North Korea to talk about it. [1] https://www.bbc.com/news/business-61090064 https://www.bbc.com/news/business-61090064
- qot 3y ago
  No, put another way this is Nike getting punished for creating a shoe that was used to kick puppies.
  - woodruffw 3y ago
    The purpose of kicking puppies is not embedded in the concept of a Nike sneaker.
  - rajamaka 3y ago
    Creating a shoe specifically designed for kicking puppies with enhanced puppy kicking features and instructions on how to kick puppies with said shoe
    - miracle2k 3y ago
      Which is, and certainly should be, entirely legal.
  - PeterisP 3y ago
    No, in this analogy the punishment is aimed at Nike employees who after creating a shoe for kicking puppies also operated puppy-kicking-as-a-service with that shoe. The people charged are the subset of the Tornado Cash devs who ran the service, not for solely developing some code.
ajross 3y ago
There's no section 230 for money laundering. If you want safe harbor from the crimes of your customers, you need to lobby for explicit protection in the law. In this case, there actually are safe harbor laws in place that protect banks from being prosecuted in exactly this way as long as they correctly implement KYC/AML protocols. Tornado didn't feel they wanted to do this, so quite deliberately and publicly flaunted the law that would have protected them. And this is what happens. What's the "precedent" being set exactly here? Follow the law like your competitors do and you won't get fingered as an accomplice?
- lucisferre 3y ago
  So "move fast, break things" isn't a valid defence?
  - klyrs 3y ago
    Gotta move fast enough you can't get caught.
MattPalmer1086 3y ago
And also gave advice on how to remain anonymous, and put in place no AML or KYC processes.
- EGreg 3y ago
  Oh, the nerve of developing a piece of software, and advising people on how to not put in place processes! I thought the default state of transactions was not putting in place processes. How exactly do we square this with freedom of speech? When Phil Zimmerman published the book with the PGP source code, Could they have simply arrested him for exporting munitions despite the first amendment? That is a serious question, how come he was able to get away?
  - JohnFen 3y ago
    > How exactly do we square this with freedom of speech Freedom of speech in the US is not, and never has been, absolute. There is all sorts of speech that is illegal to engage in. > That is a serious question, how come he was able to get away? He was absolutely investigated for ITAR violations, but the government elected not to press charges in the end. I forget why they made that decision, but I think it was a combination of the book being published only in the US at the time (which was undeniably legal) plus the huge amount of pressure -- especially public ridicule -- from the hacker community about the ridiculousness of the ITAR regulations.
  - MattPalmer1086 3y ago
    They didn't just develop software and give advice. They ran the service itself. If they had just written some software and told people how to operate it anonymously, they could not be prosecuted under these laws.
- zoklet-enjoyer 3y ago
  Might as well ban cash transactions and any services that facilitate cash transactions.
  - JohnFen 3y ago
Paul-Craft 3y ago
I don't see where it says in the article that they were blocking known OFAC sanctioned addresses, etc., but they do state that they were operating without any KYC provisions whatsoever, and that is a big no-no if you don't want to run afoul of money laundering laws in the US: > Tornado Cash operated without know-your-customer (KYC) or anti-money laundering (AML) programs as required by US law, the document alleges. It also did not register with FinCEN as a money-transmitting business, the indictment says. Semenov and Storm also created a document called “Tips to Remain Anonymous,” which advised customers to consider using Tor or a VPN, delete data from their web browsers, and leave their money in Tornado for longer periods of time to better anonymize their transactions. They also advised users to employ different IP addresses for deposit and withdrawal. As a bonus, the investors wouldn't fund a compliant version: > Storm suggested creating a version of Tornado with KYC / AML enabled, but Tornado’s unnamed venture capital investors were dismissive, saying, “I just don’t know if anyone will actually want this.” The investor added, “It would be unlikely as a fund that we’d use a ‘compliant mixer.’” I'd say these investors are as complicit in whatever conspiracy the devs are being charged with as well.
stefan_ 3y ago
This isn't a precedent at all. As expected, prosecutors were not impressed by the blockchain smokescreen. People were joking about this programmer habit of thinking they can just inject "reasonable doubt" into everything and be fine years ago on HN, and that's just not how lawyers look at things.
- xigency 3y ago
  But you see your honor, I’m a sovereign citizen! For some reason too much time spent working with machines clouds the judgement of how law and the court work.
deleted 3y ago
[deleted]

woodruffw 3y ago

I don't think this is unprecedented: the USG's reasoning (appears) to be that all actions here were ultimately the product of human behavior. Put another way: it's still a crime to kick puppies, even if you only indirectly kick puppies through your newly-invented fully-automatic Puppy Kicker 3000. Edit: to refine the analogy: it doesn't stop being a Puppy Kicker 3000 just because you add a screening phase that eliminates puppies designated by the American Kennel Club.

nabakin 3y ago
Your analogy would only make sense if Tornado Cash (Puppy Kicker 3000) was created for the purpose of money laundering (kicking puppies), but it seems like it was created for consumer privacy reasons.
- CPLX 3y ago
  Privacy for consumers of money transmitting services is called money laundering.
  - Ar-Curunir 3y ago
    Seems like cash users (everyone) and cash issuers (the government) are money launderers under this exceedingly broad definition.
    - CPLX 3y ago
      Transmitting cash for others without reporting it would in fact make you a money launderer as well.
    - spacemanspiff01 3y ago
      Try doing things with large amounts of cash, and see what happens. Take a million dollars and buy something with it. Even just depositing 10k in a bank account gets reported to the feds, and possibly investigated (And using lower amounts is illegal under structuring.) That's setting aside the instances of civil asset forfeiture where money is seized because driving with large amounts of cash is assumed to be the product of a crime. So yeah, whether it's a good policy or not, it definitely seems to be the view.
  - nabakin 3y ago
    No it is not. Maybe you need to look up the definition of money laundering.
- JohnFen 3y ago
  I think what it seems to you is different from what it seems to others. But this is the reason we have a court system -- a judge will end up deciding if TC intentionally allowed for money laundering and if TC violated KYC/AML laws.
  - nabakin 3y ago
    Sure and if their intent was to make a tool for money laundering or they attempted to subvert the law, I'm all for it
sneak 3y ago
If someone took the Tornado Cash contract source code and redeployed it on Ethereum under a new contract address today and people began using it, do you think someone deploying such a contract should face similar charges? Should the original developers face additional charges for that? What if the original developers only published the contracts but never deployed them on Ethereum, leaving that up to someone else to do? Is it the author or the deployer or the user who is liable? I mean, someone has to be liable if it didn't exist before and then it did, but if it's the author and not the deployer, you could be charged for code you wrote entirely offline and published to GitHub (if someone else later deploys it and it sees use).
- woodruffw 3y ago
  My “should” doesn’t enter into it. What matters is whether it’s indistinguishable from a criminal enterprise, which it is.
- thisgoesnowhere 3y ago
  In this case the "devs" are the owners and operators and they profit on the contract being run. The answer to all of your questions is the same. When you run this code to facilitate money laundering the deployer gets in trouble and that's how it should be I can't imagine how else it could work.
- GauntletWizard 3y ago
  Yes, no, deployer. The code is absolutely free speech, the application of it is not. I can sell you a book that says how to circumvent financial controls, I can even give a talk about circumventing financial controls, what I can't do is fly to North Korea to talk about it. [1] https://www.bbc.com/news/business-61090064 https://www.bbc.com/news/business-61090064
qot 3y ago
No, put another way this is Nike getting punished for creating a shoe that was used to kick puppies.
- woodruffw 3y ago
  The purpose of kicking puppies is not embedded in the concept of a Nike sneaker.
- rajamaka 3y ago
  Creating a shoe specifically designed for kicking puppies with enhanced puppy kicking features and instructions on how to kick puppies with said shoe
  - miracle2k 3y ago
    Which is, and certainly should be, entirely legal.
- PeterisP 3y ago
  No, in this analogy the punishment is aimed at Nike employees who after creating a shoe for kicking puppies also operated puppy-kicking-as-a-service with that shoe. The people charged are the subset of the Tornado Cash devs who ran the service, not for solely developing some code.

ajross 3y ago

There's no section 230 for money laundering. If you want safe harbor from the crimes of your customers, you need to lobby for explicit protection in the law. In this case, there actually are safe harbor laws in place that protect banks from being prosecuted in exactly this way as long as they correctly implement KYC/AML protocols. Tornado didn't feel they wanted to do this, so quite deliberately and publicly flaunted the law that would have protected them. And this is what happens. What's the "precedent" being set exactly here? Follow the law like your competitors do and you won't get fingered as an accomplice?

lucisferre 3y ago
So "move fast, break things" isn't a valid defence?
- klyrs 3y ago
  Gotta move fast enough you can't get caught.

MattPalmer1086 3y ago

And also gave advice on how to remain anonymous, and put in place no AML or KYC processes.

EGreg 3y ago
Oh, the nerve of developing a piece of software, and advising people on how to not put in place processes! I thought the default state of transactions was not putting in place processes. How exactly do we square this with freedom of speech? When Phil Zimmerman published the book with the PGP source code, Could they have simply arrested him for exporting munitions despite the first amendment? That is a serious question, how come he was able to get away?
- JohnFen 3y ago
  > How exactly do we square this with freedom of speech Freedom of speech in the US is not, and never has been, absolute. There is all sorts of speech that is illegal to engage in. > That is a serious question, how come he was able to get away? He was absolutely investigated for ITAR violations, but the government elected not to press charges in the end. I forget why they made that decision, but I think it was a combination of the book being published only in the US at the time (which was undeniably legal) plus the huge amount of pressure -- especially public ridicule -- from the hacker community about the ridiculousness of the ITAR regulations.
- MattPalmer1086 3y ago
  They didn't just develop software and give advice. They ran the service itself. If they had just written some software and told people how to operate it anonymously, they could not be prosecuted under these laws.
zoklet-enjoyer 3y ago
Might as well ban cash transactions and any services that facilitate cash transactions.
- JohnFen 3y ago

Paul-Craft 3y ago

I don't see where it says in the article that they were blocking known OFAC sanctioned addresses, etc., but they do state that they were operating without any KYC provisions whatsoever, and that is a big no-no if you don't want to run afoul of money laundering laws in the US: > Tornado Cash operated without know-your-customer (KYC) or anti-money laundering (AML) programs as required by US law, the document alleges. It also did not register with FinCEN as a money-transmitting business, the indictment says. Semenov and Storm also created a document called “Tips to Remain Anonymous,” which advised customers to consider using Tor or a VPN, delete data from their web browsers, and leave their money in Tornado for longer periods of time to better anonymize their transactions. They also advised users to employ different IP addresses for deposit and withdrawal. As a bonus, the investors wouldn't fund a compliant version: > Storm suggested creating a version of Tornado with KYC / AML enabled, but Tornado’s unnamed venture capital investors were dismissive, saying, “I just don’t know if anyone will actually want this.” The investor added, “It would be unlikely as a fund that we’d use a ‘compliant mixer.’” I'd say these investors are as complicit in whatever conspiracy the devs are being charged with as well.

stefan_ 3y ago

This isn't a precedent at all. As expected, prosecutors were not impressed by the blockchain smokescreen. People were joking about this programmer habit of thinking they can just inject "reasonable doubt" into everything and be fine years ago on HN, and that's just not how lawyers look at things.

xigency 3y ago
But you see your honor, I’m a sovereign citizen! For some reason too much time spent working with machines clouds the judgement of how law and the court work.

deleted 3y ago

[deleted]