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Tornado Cash Developer Found Guilty of Laundering $1.2B of Crypto

63 points by olegp 2y ago

olegp 2y ago
Previous discussion when he was arrested: https://news.ycombinator.com/item?id=32436413 https://news.ycombinator.com/item?id=32436413
- toomuchtodo 2y ago
  Top comment aged like milk: > Wow, just wow. Am i alone in thinking this is not going to fly if all he did was write some software that helps with your financial anonymity? There must be more. Perhaps he also deployed it? That would be a different story. The article is quite murky in that regard. Perhaps they don't know yet Code isn’t law. The law is the law. If you enable the crime willfully, you are a party to it.
  - BugsJustFindMe 2y ago
    The state of that comment has nothing to do with age. The first reply, specifically to the "Am i alone..." validation-seeking performative question, is "Probably."
    - toomuchtodo 2y ago
      I think you would find a significant population on HN that would agree with the comment I quoted. I don't fault them, that's just how some brains are built and operate (we are all wired differently), either due to a libertarian model or autism/neurodiversity (which also inherently optimizes for software dev and engineering aptitude). I just wish these folks, before doing something like this, would ask someone: "Hey! I have this belief, and I want to work on this. Is there any potential harm by doing so? What does the risk calculation look like?" instead of "Imma throw this out into the world and Imma be fine." You might not be fine! And imho, we'd all be better off if you were fine vs going to prison, at least in this context.
deleted 2y ago
[deleted]
superkuh 2y ago
This story is framed oddly. Imagine if you blamed, say, cash, for being used by North Korea. Also compare this treatment to the employees at Wells Fargo/Wachovia who laundered billions for Mexican drug cartels, >The settlement reached between Wachovia and U.S. authorities, known as a "deferred prosecution," raises questions. It's a probationary agreement, effectively allowing the bank to evade prosecution if it abides by the law for a year. While the fine imposed was substantial, it amounted to less than 2% of Wachovia's 2009 profit.
- ceejayoz 2y ago
  > Imagine if you blamed, say, cash, for being used by North Korea. This is odd framing. If you launder cash for the North Koreans, you will similarly find the weight of various criminal justice systems descending upon you. Ethereum is widely in legal usage. I'm all for harsher penalties for Wells Fargo.
- itsoktocry 2y ago
  People's default assumption seems to be that the prosecutors are corrupt, or dumb, or both. Wasn't the Wells Fargo amount much smaller, in the millions? And someone is going to jail for that, too?
  - superkuh 2y ago
    It's easy to be confused about Wells Fargo money laundering. There are just so many repeated cases of it every few years. To be specific, I said the Wachovia one, https://www.theguardian.com/world/2011/apr/03/us-bank-mexico-drug-gangs https://www.theguardian.com/world/2011/apr/03/us-bank-mexico... and yes, billions. As for the prosecutors in general: they do a job. It's the DAs bringing indictments specifically that are corrupt as a rule.
- brookst 2y ago
  The quote from prosecutors in the article is actually really good: it is about human behavior, not the tools. Abstracting the question to whether tumblers or cash or guns or whatever should be 100% legal or 100% illegal is too reductive to be useful for anything but rhetoric. It’s when people take actions with intent and outcomes that the law gets interested. Those are what we should talk about. Cash has lots of legitimate uses and some uses which I’m fine saying are illegal. Ditto with guns, even speech. In this case the summaries at least sound like there was tons of evidence he was specifically designing and building features to make the service better for criminals, with the intent and outcome of facilitating criminal activity. Behaviors, as the prosecutor said.
cedws 2y ago
I don't agree with the ruling, but I wonder how many people out there are living the good life because of dodgy funds they laundered through Tornado Cash. Flying in private jets, driving lambos, drinking the finest whisky. While many of those that do honest work like teaching the next generation live in poverty.
- warkdarrior 2y ago
  Those suckers doing honest work (whatever that means) should have used Tornado Cash to protect their earning from the tax man.
  - jfengel 2y ago
    So... doing honest work, then dishonestly avoiding taxes?
    - 2OEH8eoCRo0 2y ago
      I think they're being sarcastic.
- lambdaxyzw 2y ago
  Keep in mind that the crime occured earlier - when they got the dodgy funds somehow. If tornado cash didn't exist, they would just launder the money some other way (like people did for thousands of years before - and there's plenty of ways to launder money using cryptocurrencies).
brookst 2y ago
Key quote: > While Pertsev added functionality to the web interface that allowed legitimate users to separate their funds from those arriving from known criminal addresses, they characterized the effort as “too little and too late.” I admit it sounds pretty damning to have a UI affordance for “keep my funds separate from the known criminals this service knowingly serves”. I have little sympathy for those who intentionally increase crime as some kind of political statement, but it seems like maintaining plausible deniability would be very important to those who do so.
- joemazerino 2y ago
  "Known criminal addresses" isn't an easy nut to crack. False positives prevail and the list is held by institutions readily hostile towards crypto. People who used Tornado Cash themselves, even non-criminals, are marked as criminals because of the way the lists are maintained. The article itself says "30% of the funds were from illicit activity", which leaves 70%. When is the last time a bank enabling criminals like HSBC had it's directors arrested and thrown in jail? This sets a dangerous precedent.
  - JumpCrisscross 2y ago
    > People who used Tornado Cash themselves, even non-criminals, are marked as criminals because of the way the lists are maintained Eh, they’re marked as suspicious. (Correctly.) But I don’t know if merely using Tornado would be enough to convict on in most competent jurisdictions.
    - lambdaxyzw 2y ago
      Of course not, but merely using tornado cash would be enough to make many "regular" cryptocurrency exchanges refuse to work with you and/or ban you. Or even someone sending you transfer from tornado.cash, or receiving a transfer from someone that uses tornado cash. Tainting is unfortunately very inexact and heuristic based.
  - brookst 2y ago
    > "Known criminal addresses" isn't an easy nut to crack. True. But good faith efforts go a long way. In no world is "separate my funds from those the operators of Tornado believe are illicit" good faith. > When is the last time a bank enabling criminals like HSBC had it's directors arrested and thrown in jail? Whaddaboutism is not a defense. I fully support jailing the entire executive staff of HSBC. The fact that has not happened does not change the facts or merits of this case, any more than I can get out of a speeding ticket by noting that I read about someone going much faster.
frank_bb 2y ago
[dead]
Night_Thastus 2y ago
Crypto, used for illegal activity? I am shocked, shocked! Well, not that shocked.
- krishan711 2y ago
  Just like normal money right?
jiveturkey 2y ago
not sure i agree with this. > But Dutch prosecutors say the case was simpler than all that. It wasn’t about the right to privacy, or the liability of open source developers, they claim, but the choices of an individual. “[Pertsev] made choices writing the code, deploying the code, adding features to the ecosystem. Choice after choice, all the while he knew that criminal money was entering his system,” M. Boerlage, the lead prosecutor on the case, told WIRED ahead of the verdict. “So it’s not about code. It’s about human behavior.” How is it different than, say, gun or ammo manufacturers? I suppose the quote here is highly simplified and almost all nuance removed, but still. How is this different than metasploit?
- ab5tract 2y ago
  Wouldn’t a more apt question be “would this apply to a company dedicated to swapping the serial numbers between after market firearms?” For my taste, the answer is en emphatic yes it would and yes it should. And I would expect any service offering turn key, automated “metasploit-ing” would find themselves in violation of the law as well.
  - beefnugs 2y ago
    I swear no person on earth ever makes a proper analogy: You can't just gloss over the fact that crypto-currency mixing is a real privacy concern that should exist. If you are a rich m'fer not every person you buy a piece of gum from should know they could blackjack you to get to $billions Your analogy would have to be more along the lines of the right to privacy that you own a firearm with a particular serial number, instead of every person on earth knowing exactly how to frame you with said serial number openly
    - ab5tract 2y ago
      Are you honestly saying that crypto currencies are so fragile that the mere knowledge of a token identifier is enough to frame the owner for a crime? If so, that's just further evidence of how ridiculous the entire crypto currency concept is. It's also kind of amusing that the very mechanism that would supposedly protect you from the extortion is the same mechanism that would allow the criminals to cover their tracks after stealing your crypto.

63 points by olegp 2y ago

Previous discussion when he was arrested: https://news.ycombinator.com/item?id=32436413 https://news.ycombinator.com/item?id=32436413

toomuchtodo 2y ago
Top comment aged like milk: > Wow, just wow. Am i alone in thinking this is not going to fly if all he did was write some software that helps with your financial anonymity? There must be more. Perhaps he also deployed it? That would be a different story. The article is quite murky in that regard. Perhaps they don't know yet Code isn’t law. The law is the law. If you enable the crime willfully, you are a party to it.
- BugsJustFindMe 2y ago
  The state of that comment has nothing to do with age. The first reply, specifically to the "Am i alone..." validation-seeking performative question, is "Probably."
  - toomuchtodo 2y ago
    I think you would find a significant population on HN that would agree with the comment I quoted. I don't fault them, that's just how some brains are built and operate (we are all wired differently), either due to a libertarian model or autism/neurodiversity (which also inherently optimizes for software dev and engineering aptitude). I just wish these folks, before doing something like this, would ask someone: "Hey! I have this belief, and I want to work on this. Is there any potential harm by doing so? What does the risk calculation look like?" instead of "Imma throw this out into the world and Imma be fine." You might not be fine! And imho, we'd all be better off if you were fine vs going to prison, at least in this context.

deleted 2y ago

[deleted]

superkuh 2y ago

This story is framed oddly. Imagine if you blamed, say, cash, for being used by North Korea. Also compare this treatment to the employees at Wells Fargo/Wachovia who laundered billions for Mexican drug cartels, >The settlement reached between Wachovia and U.S. authorities, known as a "deferred prosecution," raises questions. It's a probationary agreement, effectively allowing the bank to evade prosecution if it abides by the law for a year. While the fine imposed was substantial, it amounted to less than 2% of Wachovia's 2009 profit.

ceejayoz 2y ago
> Imagine if you blamed, say, cash, for being used by North Korea. This is odd framing. If you launder cash for the North Koreans, you will similarly find the weight of various criminal justice systems descending upon you. Ethereum is widely in legal usage. I'm all for harsher penalties for Wells Fargo.
itsoktocry 2y ago
People's default assumption seems to be that the prosecutors are corrupt, or dumb, or both. Wasn't the Wells Fargo amount much smaller, in the millions? And someone is going to jail for that, too?
- superkuh 2y ago
  It's easy to be confused about Wells Fargo money laundering. There are just so many repeated cases of it every few years. To be specific, I said the Wachovia one, https://www.theguardian.com/world/2011/apr/03/us-bank-mexico-drug-gangs https://www.theguardian.com/world/2011/apr/03/us-bank-mexico... and yes, billions. As for the prosecutors in general: they do a job. It's the DAs bringing indictments specifically that are corrupt as a rule.
brookst 2y ago
The quote from prosecutors in the article is actually really good: it is about human behavior, not the tools. Abstracting the question to whether tumblers or cash or guns or whatever should be 100% legal or 100% illegal is too reductive to be useful for anything but rhetoric. It’s when people take actions with intent and outcomes that the law gets interested. Those are what we should talk about. Cash has lots of legitimate uses and some uses which I’m fine saying are illegal. Ditto with guns, even speech. In this case the summaries at least sound like there was tons of evidence he was specifically designing and building features to make the service better for criminals, with the intent and outcome of facilitating criminal activity. Behaviors, as the prosecutor said.

cedws 2y ago

I don't agree with the ruling, but I wonder how many people out there are living the good life because of dodgy funds they laundered through Tornado Cash. Flying in private jets, driving lambos, drinking the finest whisky. While many of those that do honest work like teaching the next generation live in poverty.

warkdarrior 2y ago
Those suckers doing honest work (whatever that means) should have used Tornado Cash to protect their earning from the tax man.
- jfengel 2y ago
  So... doing honest work, then dishonestly avoiding taxes?
  - 2OEH8eoCRo0 2y ago
    I think they're being sarcastic.
lambdaxyzw 2y ago
Keep in mind that the crime occured earlier - when they got the dodgy funds somehow. If tornado cash didn't exist, they would just launder the money some other way (like people did for thousands of years before - and there's plenty of ways to launder money using cryptocurrencies).

brookst 2y ago

Key quote: > While Pertsev added functionality to the web interface that allowed legitimate users to separate their funds from those arriving from known criminal addresses, they characterized the effort as “too little and too late.” I admit it sounds pretty damning to have a UI affordance for “keep my funds separate from the known criminals this service knowingly serves”. I have little sympathy for those who intentionally increase crime as some kind of political statement, but it seems like maintaining plausible deniability would be very important to those who do so.

joemazerino 2y ago
"Known criminal addresses" isn't an easy nut to crack. False positives prevail and the list is held by institutions readily hostile towards crypto. People who used Tornado Cash themselves, even non-criminals, are marked as criminals because of the way the lists are maintained. The article itself says "30% of the funds were from illicit activity", which leaves 70%. When is the last time a bank enabling criminals like HSBC had it's directors arrested and thrown in jail? This sets a dangerous precedent.
- JumpCrisscross 2y ago
  > People who used Tornado Cash themselves, even non-criminals, are marked as criminals because of the way the lists are maintained Eh, they’re marked as suspicious. (Correctly.) But I don’t know if merely using Tornado would be enough to convict on in most competent jurisdictions.
  - lambdaxyzw 2y ago
    Of course not, but merely using tornado cash would be enough to make many "regular" cryptocurrency exchanges refuse to work with you and/or ban you. Or even someone sending you transfer from tornado.cash, or receiving a transfer from someone that uses tornado cash. Tainting is unfortunately very inexact and heuristic based.
- brookst 2y ago
  > "Known criminal addresses" isn't an easy nut to crack. True. But good faith efforts go a long way. In no world is "separate my funds from those the operators of Tornado believe are illicit" good faith. > When is the last time a bank enabling criminals like HSBC had it's directors arrested and thrown in jail? Whaddaboutism is not a defense. I fully support jailing the entire executive staff of HSBC. The fact that has not happened does not change the facts or merits of this case, any more than I can get out of a speeding ticket by noting that I read about someone going much faster.

frank_bb 2y ago

[dead]

Night_Thastus 2y ago

Crypto, used for illegal activity? I am shocked, shocked! Well, not that shocked.

krishan711 2y ago
Just like normal money right?

jiveturkey 2y ago

not sure i agree with this. > But Dutch prosecutors say the case was simpler than all that. It wasn’t about the right to privacy, or the liability of open source developers, they claim, but the choices of an individual. “[Pertsev] made choices writing the code, deploying the code, adding features to the ecosystem. Choice after choice, all the while he knew that criminal money was entering his system,” M. Boerlage, the lead prosecutor on the case, told WIRED ahead of the verdict. “So it’s not about code. It’s about human behavior.” How is it different than, say, gun or ammo manufacturers? I suppose the quote here is highly simplified and almost all nuance removed, but still. How is this different than metasploit?

ab5tract 2y ago
Wouldn’t a more apt question be “would this apply to a company dedicated to swapping the serial numbers between after market firearms?” For my taste, the answer is en emphatic yes it would and yes it should. And I would expect any service offering turn key, automated “metasploit-ing” would find themselves in violation of the law as well.
- beefnugs 2y ago
  I swear no person on earth ever makes a proper analogy: You can't just gloss over the fact that crypto-currency mixing is a real privacy concern that should exist. If you are a rich m'fer not every person you buy a piece of gum from should know they could blackjack you to get to $billions Your analogy would have to be more along the lines of the right to privacy that you own a firearm with a particular serial number, instead of every person on earth knowing exactly how to frame you with said serial number openly
  - ab5tract 2y ago
    Are you honestly saying that crypto currencies are so fragile that the mere knowledge of a token identifier is enough to frame the owner for a crime? If so, that's just further evidence of how ridiculous the entire crypto currency concept is. It's also kind of amusing that the very mechanism that would supposedly protect you from the extortion is the same mechanism that would allow the criminals to cover their tracks after stealing your crypto.