U.S. Treasury sanctions virtual currency mixer Tornado Cash
home.treasury.gov
home.treasury.gov
So, it seems that it is prohibited for US persons to send tokens to these smart contracts, or to withdraw tokens from these smart contracts.
What about miners running in the United States? Are US-based miners also prohibited from producing blocks that include transactions that interact with these smart contracts?
And what about blocks that are produced by non-US miners, and which contain transactions that interact with these smart contracts? Might US-based miners be prohibited from validating and building upon such blocks?
Does US law effectively now mandate a fork of Ethereum so that US persons can safely interact with a blockchain that excludes all interactions with Tornado smart contracts? It seems like an extreme implication, but can the possibility be excluded?
I believe we'll likely see other actions taken by US companies, such as Twitter banning the Tornado Cash account, Microsoft deleting its github repositories, the registrar of its current domain name disabling it, Discord kicking it off, and so forth. Perhaps large RPC providers refusing calls involving the sanctioned addresses, though I think that's less likely.
We will also see an escalation of fiat enabled exchanges refusing to do business with users who bring assets from Tornado Cash connected accounts, however there are other developments in the pipeline that will mitigate this, and increased aggression by proponents of financial exclusion will drive adoption as they are a real pain for legitimate actors too, and also these systems are necessary to increase transaction throughput anyway. (eg. rollup protocols on Ethereum, lightning network protocols on Bitcoin)
Perfectly happy to see all the centralized support crutches kicked out from under another poster child for fake decentralization rhetoric. Let's see how they do after they have to eat that dogfood for breakfast, lunch, and dinner, not just for dessert.
Edit: Authoritative AWS nameservers have now stopped resolving tornado.cash.
What's important is to keep that potential open, of course.
It happened: https://twitter.com/0xdev0/status/1556933551073153024
why not?
Maybe locking account of user who use it will be sufficient.
That tokens from "something like" Tornado should not be handled, though, seems like it would be harder to specify.
source, 4 transactions:
100 ETH - https://etherscan.io/tx/0xd8d586ad33434be0f51c5c9d6996b1c8b208b04155683eee377849b67a0b13cd
100 ETH - https://etherscan.io/tx/0xfeb399764590a7c1ca321492b4634ceba530093d43d814aa1c5afdf3fa03b092
10 ETH - https://etherscan.io/tx/0x0f82d42f6d455f3b745be670a04d37a254d02a4b1ae35af967ed7d90de34ffdc
10 ETH - https://etherscan.io/tx/0x98c40bdde8edd84ba4c483bfca447bb3209957c1be90582d5fbf8630845df814Guilty until you can prove your innocence?
More generally, see https://news.sky.com/story/us-cryptocurrency-developer-jaile... ; it was inevitable that as the value involved in cryptocurrency increased, it would reach the threshold where "no you are not allowed to provide aid to enemies of the United States" became a serious consideration.
Getting cash out of your bank account is also an easy way to anonymize.
US treasury tried to sanction a Monero wallet and ended up sanctioning a transaction hash.
https://www.treasury.gov/ofac/downloads/sdnlist.txt
> Digital Currency Address - XMR 5be5543ff73456ab9f2d207887e2af87322c651ea1a873c5b25b7ffae456c320;
https://localmonero.co/blocks/search/5be5543ff73456ab9f2d207...
Sanctions enforcement tends to pay for itself. It's hard to create new mixers from prison or when your bank accounts keep getting frozen. (It's easy to set up a cash business and launder money. Most people don't do it. It's still a thriving industry.)
You don't need a lot of resources to run your own.
This is true of all money laundering. Any business that takes cash has everything it needs to cook the books to show phantom income.
TC clones can probably fly under the radar with a small transaction volume, but any attempt to launder large sums would get caught pretty quickly (with standard forensic accounting techniques used to trace the beneficiaries).
Plus, there is not really a way to tell who creates a smart contract if you cover your tracks well enough.
This sanctions stuff is smoke and mirrors for the government to try and convince themselves they are capable of doing something.
The most realistic approach is for major chains to go POS and the major validators and other important pieces of the puzzle to need a lot of resources to the point where they become businesses and are on the governments radar (and by extension they would need to comply with regulations).
But because everyone knows that is a natural consequence of POS, it is exactly why no reasonable person would be on board with a transition to it.
>But because everyone knows that is a natural consequence of POS, it is exactly why no reasonable person would be on board with a transition to it.
You described mining - public companies operating big industrial warehouses with miners. PoS is the opposite - it needs next to zero physical resources. No reasonable person can support PoW unless they support totalitarianism. There's no way to make PoW resistant to government interference.
We already know that the US has technology to track mixed transactions.
But no details have been published on the mechanics of this “de-mixing”.
Possible it has to do with sloppy change address reuse in Wasabi?
No, it’s really not. Mixers need liquidity, which means they need popularity and volume. That’s not overnight.
A secondary effect of sanctions is indicating what the regulators do and do not consider illegal. Up until now, it was at least marginally possible to state "But I didn't know it was illegal. TornadoCash was doing the exact same thing for years and never got into trouble". After this ruling, that excuse no longer applies and that might dissuade a lot of people who might otherwise be tempted to run a mixer of their own.
Also, reputation counts for a lot when it comes to mixers. A mixer that has existed for years is probably legit, a mixer that started up yesterday is a lot more likely to be a rugpull. Even if it will come down to whack-a-mole with the Treasury sanctioning new mixers as they pop up, it might be very difficult for any individual mixer to build up enough reputation to attract significant business.
TC utility is diminished by other fact - TC is blocked on exchange level, exchanges do not accept funds coming from TC smart contract.
(And as any programmer will tell you, just because you have the source code available does not automatically mean you can see where it has a tricky edge case with massive security implications. The obfuscated C contests are proof of that)
For most contracts they link actual source code to make inspection even easier - large part of trust in the system comes from the fact that contracts are inspectable.
What is interesting here, though, is that Tornado Cash doesn't run anything: they may as well not exist as an entity anymore. It also isn't a blockchain and doesn't have nodes: third parties thereby also don't run Tornado Cash.
Tornado Cash, instead, is one of many random contracts executing on Ethereum (as well as third-party Ethereum-like constructs; some/many of those are pretty damned centralized, with servers that process and store transactions, so I am gong to concentrate on Ethereum itself as it is the most interesting).
So, with the smart contract of Tornado Cash -- as Tornado Cash isn't a group of people or a company: it is just code -- having been sanctioned, if you are a miner and mine a block on Ethereum that includes a transaction that touches Tornado Cash, is that now illegal? I feel like this is how the concept of sanctions would normally play out in meat space with real people, to prevent the sanctioned services from being utilized.
If so, and I think this is where it "gets good": let's say 99% of miners care about the sanctions, and 1% don't... when you mine a block, you choose a parent for that block; arguably now, if you actively chose to accept a parent block that includes a Tornado Cash transaction, that should also be illegal (due to being sanctioned).
We don't have a good framework in place for sanctioning contracts by address, contract itself, or by effect.
I'm expecting a push toward laws will evolve to make calling mixers illegal, but that will likely hit some 1st amendment push back. If money is speech, then is it free if it has no privacy?
Note: It is exceedingly rare for the free money to actually be so.
I'm not a lawyer, but I don't think it follows that every financial transaction is a 1st amendment issue, just because spending money to promote a message is protected.
- It will not be legal for miners to run/"execute code on behalf of" smart contracts from the sanctioned list, which can be downloaded from the Treasury web site and is updated regularly. This is very akin to how the sanctioned people list works currently.
- The treasury will maintain a list of blockchain addresses that are known to contain tainted coins and all businesses need to verify they don't accept business when the payment comes from one of those. A little bit more tricky since you can send money from any wallet to any other one, but still this is how a lot of the current sanctions already work. You could imagine this being only applicable for companies with a banking or exchange license or something like that. Perhaps it would become a part of regular auditing done by accountancy companies.
- (Possibly the most likely depending on how much lobbying the crypto industry manages to get in) Miners don't have to do anything, but all crypto exchanges with users in the USA (in this case, I'd expect the EU and other big jurisdictions to develop similar rules over time) are forbidden from transacting with a list of addresses belonging to contracts available from the Treasury.
Options 2 and 3 are very similar, but 3 is scoped only to exchanges. Since the majority of users is not sophisticated enough to transact without exchanges, this seems like it would give the most bang for the buck for the Treasury. More sophisticated launderers could be tracked on a case-by-case basis if needed.
One thing I think is not very likely to happen is for the Treasury to say: "Oh well! Those crypto rascals outsmarted us by running their money laundering smart contracts on the Eth VM, so we guess money laundering is fine now".
In general, most of the supposed value of cryptocurrency seems to be that everyone looks the other way when parties do things that look like or are illegal but take the money anyway. Functionality, cryptocurrency is very similar to e-gold, and I see no reason it should be allowed to do the same things just because it’s somewhat decentralized.
This has come up in other contexts before, most famously the idea of using OP_RETURN to embed child pornography into the Bitcoin blockchain.
An Ethereum client must download and execute all transactions in each block in order to determine if that block is valid, and thus learn current state of the system. The client can't know if this "illegal" transaction has been executed until it actually executes it. As an operator you don't have any choice, other than simply turning everything off and "rugging" all your customers.
So let's say you're Coinbase. You have billions of dollars of other people's money, innocent people's money, in your custody. If you refuse to process blocks that contain transactions involving sanctioned entities, or that contain illegal child pornography, you destroy those billions of dollars of assets.
You're not going to make billions of dollars of assets unspendable. Not a snowball's chance in hell. You will process those blocks as the protocol requires. Doing otherwise would be as ridiculous as Google turning off its entire search engine merely because some of its automated actions technically violate laws from time to time. It would be like Intel razing a whole semiconductor fab to the ground because it learned that some of the sand used in creating some wafers was sold by a sanctioned country.
There is absolutely no way the US government is going to demand that kind of destruction of value as a matter of compliance.
This is, in fact, exactly the kind of thing Governments tend to exist for.
Seems pretty obvious from the statement that doing business that includes this Tornado Cash entity will infect your business with criminal liability.
Reply again?
Edit: there is some "sort of" precedent. DeCSS was illegal.
Oh I totally get that, but...
I reasonably believe in good-faith that it hasn't been categorically proven to be illegal. The reasons for this may seem obvious to many, but just it's not for anybody else then I'll give at least one persuasive argument. Illicit activity happens through legitimate financial transactions. For example, if I trade somebody a pizza for $10, how am I to know that $10 wasn't used in a criminal activity, ever, in the total existence of those note's circulation? And further, by using cash at all, as a concept insofar that cash is not rigorously tracked while in circulation, that the whole cash money system is illegal... Cash based economies to a great extent protect the privacy of participants. Those machines that make change, I suppose that's money laundering, and I would suppose they are laundering money for someone, but also... they be making legitimate 20x quarters from a $5 bill in a coin operated business setting. The quarter change making machine is the physical analog of a crypto mixer, but it's perhaps a bad example. Because making change for the sake of privacy is an unlikely activity, albeit a reasonable legitimate (if you ask me) activity.
I honestly would love to see more court precedence set on some of these so-called "structuring" laws where somebody intentionally "structure" or "laundered" money for the honest-to-goodness sake of legitimate privacy, or even for somehow being a form of free speech, something like that... to strike away some of these absurd regulatory powers before a panel of jurors.
There's lots of court precedent for this. Courts have overwhelmingly found that the goverment's desire to access transactional data for tax compliance outweighs any right to privacy.
Courts generally find that just because there might be legitimate reasons to do something with money that doesn't override the requirement to keep records for for tax purposes.
No, it shows the exact opposite - that mixers are legal and the government has to utilize a completely arbitrary executive power to ban particular mixers.
"Sir, the hacker groups seem to love this thing we've only recently identified as 'FOSS.' It's surfacing to be an existential threat to our CONOPs. I'm requesting your approval to authorize immediate sanctions against the FOSS threat."
'Oh, shucks, there's no rule that says a dog can't play baseball, or that you can't use open source to do financial crime, I guess we can't sanction people who use it for money laundering!'
It’s actually not easy to create a new mixer because the whole idea is that you need a fair volume of legitimate traffic. If you set one up and nobody uses it, you see no benefit. If only criminals use it, you’ve created a great lead generator for the authorities. If you’re sufficiently conspiratorial in mind, blocking the best known mixer would be a great way to drive traffic to new mixers which they secretly run.
Mixer program code is publicly deployed and is run on-chain by the block validators. How would government secretly run a mixer?
2. Compromising someone’s project - want to bet someone wouldn’t agree to “accidentally” make a bug in exchange for a shorter sentence? (I’m not saying everyone who works on these are drug dealers or something but I’d bet there are a lot of cases for tax evasion threats given the ideology)
3. Mixers are critically dependent on having enough volume to meet demand but using one adds cost and persecution risk so most people don’t use them. If you knew someone like the DPRK was trying to launder a large amount of money, they’d be limited based the number of other participants – especially as news like today’s tells everyone that using a mixer means a non-trivial risk of permanently tainting the tokens you launder. If you started submitting transactions to and from your own wallets, you could make the analysis problem easier by ensuring that most of the participants are secretly known to you.
As in, deploy contract, yes. As in, have enough liquidity to both “mix” (aka launder) money and provide sufficient anonymity, no, that’s a network effect which is largely winner-take-all. The largest mixers will be the safest and most effective but then also the biggest targets. As you go down the list, they get less likely to be sanctioned but more likely to be unsafe/honeypots/ineffective.
Eventually, they'll just KYC the whole chain to your wallet because it's much cheaper to do. If you can't prove that your chaincoins are clean, you can't convert them to usable money.
1. The amount of money you can mix depends on the scale of the mixing operation
2. It's easy to build something that looks like a mixer but at some point steals the deposited money.
Sure thing. Send me your money and I will absolutely 100% for sure send back the same amount but anonymized.
If an entity is sanctioned, anyone doing business with them (such as handling BTC downstream from Tornado) will face a criminal liability. You will have a problem, and a nasty one.
That thing just turned into a hand grenade.
> While most virtual currency activity is licit, it can be used for illicit activity
Moreover, the sanctions law empowers the USG to sanction people, and the entities they run, but with this measure, is being misappropriated to prohibit Americans from using neutral privacy tools that no one runs. This marks a significant expansion in the scope of discretionary power wielded by the state, without any legislation authorizing this escalation in powers.
Finally, in reaction to the sanctioning of a smart contract address, Github has now removed all code for the Tornado Cash smart contract, and banned any user who has contributed code to it, which further reinforces the argument that this measure is an assault on free speech.
Try sending money to Al Qaeda and you'll find out this not exactly a new thing.
The argument you're making is that the laws made by a democratic government should not apply to a part of the world, because it uses fancy language like "smart contract". That's an extraordinary claim.
The idea that "no-one runs" them is also bogus: every Ethereum node runs them. Having a public-access virtual machine becomes a weird legal matter once the North Koreans start using that for proliferation.
Sending money to al-Qaeda involves the intent to aid al-Qaeda. Increasing the anonymity set of cash, by using cash, or the anonymity set of tornado cash, by using tornado cash, and inadvertedly helping a select group of criminals avoid financial surveillance (among a huge number of inadvertent effects), is not in the same category of actions as acting with the intent of helping a criminal.
>>The argument you're making is that the laws made by a democratic government should not apply to a part of the world,
The argument I'm making is that the laws violate human rights, because privacy is a human right, even if the CCP or the US Treasury disagrees. Something being a law does not automatically make it just.
Moreover, there is no law prohibiting the use of privacy technology. All the privacy violating laws were designed around the reliance of people on financial intermediaries, which don't exist on a public ledger with direct write access for end-users. The current US Treasury measure is a misapplication of the sanctions laws. The law wasn't designed to allow software to be sanctioned.
>>The idea that "no-one runs" them is also bogus: every Ethereum node runs them.
We may as well act as if "no one runs it" for the purposes of deciding on the appropriate legal treatment of privacy protected transactions, since the idea of forcing every one in the world to not run some popular node software, or creating an American firewall to prevent people in the US from connecting to those nodes, is such an affront to liberal democratic principles - including the right to use strong encryption - that it's not even worth addressing.
> As a result of today’s action, all property and interests in property of the entity above, Tornado Cash, that is in the United States or in the possession or control of U.S. persons is blocked and must be reported to OFAC.
My understanding is that it is now illegal for U.S. people to use the Tornado Cash smart contract. Given that Ethereum is pseudonymous, I'm not sure how they plan to enforce that, but I guess they could catch people who use it directly through a KYCed account (e.g. Coinbase).
> All transactions by U.S. persons or within (or transiting) the United States that involve any property or interests in property of designated or otherwise blocked persons are prohibited unless authorized by a general or specific license issued by OFAC, or exempt.
This is also not clear. Are people who use or have used Tornado Cash now designated/blocked persons? Or is the smart contract itself the "blocked person"?
If the former, how is that even possible to enforce? U.S. persons are no longer allowed to accept coins that can can be traced back to Tornado Cash usage in the past? What are they supposed to do with the "tainted" coins? Send them to the U.S. Treasury? Destroy them? Or are you supposed to ask your customers if they have used Tornado Cash in the past? What if they lie? etc.
If the latter[0], it would mean that it's illegal for U.S. persons to accept transactions originating from the Tornado Cash smart contract. But that can be bypassed trivially by going through an intermediary address before sending the ETH.
[0] I believe that interpretation is more likely given that they gave a list of addresses: https://home.treasury.gov/policy-issues/financial-sanctions/...
Regardless, the website is merely a GUI to make things easier and not necessary for functionality in this case... or is it somehow necessary?
Mixers are really great at doing stuff they claim to do, and they do work as intended.
Tornado.cash was next no matter what, it was just 'when'.
Given that many regulators have already banned and delisted some privacy coins from being exchanged, it is not a surprise to see Tornado.cash and other mixers also being banned by exchanges.
For example, if a smart contract mixer was designed to hold incoming funds in abeyance until the submitter contacts the operator, provides proof of identity, proof of source of funds, etc, and once everything is checked out was finally given some signed token that they can send to the mixer to release the funds from abeyance, at which point it starts getting mixed with other transactions, that might potentially be acceptable.
The checking needed is to stay on the treasuries good side is probably slow and complex (and require the operator to take a substantial fee), possibly to the point where no such mixer could get enough transaction volume to actually function, but it is in principal possible. Note this works even when the contract's design is such that the operator cannot possibly determine which output comes from which inputs.
But Tornado Cash by design cannot do anything to even attempt to prevent criminals from using it, which is why it got sanctioned.
Tornado is a straight up money laundering (specifically, layering [1]) service. Monero can be that. But it's also other things, which makes it at the very least defensible in a way someone interacting with Tornado is not.
[1] https://www.stpaulschambers.com/stages-of-money-laundering-e...
Funnily enough, Congress already passed a mandatory kill switch law for automobile manufacturers. Supposedly for stopping drunk drivers. You already know it'll be used for any purpose the police see fit. Once they have the ability, there's no reason not to.
Privacy is not a crime, and money laundering doesn't mean obtaining financial privacy.
It's the tech they they haven't backdoored that poses a threat to their surveillance/control model. Tech like Tornado.
Zcash is good, but not popular. Same for zk.money
There's no possible attack to deanonymize the full zero-knowledge model beyond the utilization of always existing metadata - which needs separate solutions for every such system. In practice, zcash doesn't have that many users, so the anonymity set isn't big, but that's a separate issue to technology.
The question which one is better in practice right now is a more complex one. Even a perfect solution like zcash/zk.money is useless if (just a random number) only 3 people use it, and ringct with (again a random number) 100k separate people with roughly equal tx count would obviously win. My estimate is that tornado.cash is the most anonymous. Monero is hard to estimate because there's no way to know how many spent outputs are known to the American government and/or cooperating chain analysis companies. Is it <1%? Then it's probably second best. Is it 90%? Run away.
Last but not least monero can be deanonymized retroactively by quantum computers. Tornado, zk.money and zcash can't - they can be robbed (monero can be robbed too, obviously) but that's a much better failure mode.
We will continue to aggressively pursue actions against currency mixers laundering virtual currency for criminals. Today, @USTreasury sanctioned virtual currency mixer Tornado Cash, which is a U.S.-sanctioned, DPRK state-sponsored hacking group, used by the DPRK to launder money.
>This includes over $455 million stolen by the Lazarus Group, a Democratic People’s Republic of Korea (DPRK) state-sponsored hacking group that was sanctioned by the U.S. in 2019, in the largest known virtual currency heist to date.
There's nothing preventing one country from supporting or using a hacker group in another country.
https://web.archive.org/web/20220808155413/https://twitter.c...
I could clone Tornado.Cash's contract code in half an hour; would my new deployment also be sanctioned?
What about if Ethereum migrated to some kind of ZK-EVM and _all_ of the transactions are suddenly private and untraceable? Other chains already have some of these properties.
I dunno. I don't think I particularly want to live in a world where it's essentially impossible to regulate money. But I don't really see how to avoid it anymore.
No. But it would be illegal.
Do you think nobody thought of this in the millennia we used cash and commodity money?
Failing to disclose the commercial effects of those transactions on your own tax liability to the IRS is illegal. But that's orthogonal to cloning or using a tool which facilitates transaction privacy.
They aren’t. But anyone using an open tumbler like Tornado is choosing to live a life of continuous arrest and asset freezing. Because while private transacting isn’t illegal, using a money laundering service will continuously put you on overlapping law enforcement radars, and all it takes for a mixer to become a money launderer is the wrong person to use it, something users can’t control. (If you’re the one deploying these services, lol, good luck.)
All they've done is Sanction 'A tool'. Why would sanctioned entities care if they used a sanctioned tool? it honestly makes no sense to me.
I've long said that cryptocurrency will force people to decide whether they want a world where we have internet freedoms like free speech and access to strong encryption, or we want to be able to tax income and regulate finance.
By turning finance into published information, cryptocurrency reveals the authoritarian core of modern left wing political ideology. The idea that those on the left are liberal will be exposed as hollow by cryptocurrency.
In any case, unless you ban public access to strong encryption, people will use cryptocurrency with increasing frequency. A set of permissionless tools offers the potential for lower friction in finance and payments than tools permissioned by a centralized entity.
The question cryptocurrency forces you to answer is: how far are you willing to take centralization? You can no longer leave free speech and encryption communication alone, while centralizing finance under regulatory authorities.
For what? "Value storage" and grey/black market purchases and laundering? Because the dream of crypto being used as money for real everyday transactions looks more and more preposterous with each passing day.
For everything:
International remittance: no need to go the bank. Just send the USDC/DAI/RAI from my hardware wallet.
Community treasuries: if me and a few other people in an online community want to create a jointly controlled fund, we can easily do that by creating a DAO, complete with a multisignature wallet. This doesn't require us to live in the same country, to register a corporation or a corporate controlled bank account, or reveal our real identities to each other. It makes casual financial collaboration orders of magnitude easier.
Registration-free electronic cash payments. If I have a MetaMask browser wallet, and layer 2s finally solve the problem of extremely constrained Ethereum scalability, I'll be able to visit a website and when I encounter a paywall, I'll be able to pay $0.01 to read the article, instead of having to choose between buying a subscription or simply not reading the article (more likely). This is the kind of casual transaction between parties without an existing relationship that becomes far more practical with a well-developed cryptocurrency sector.
Cryptocurrency becomes better than traditional finance for a significant fraction of payment applications if when scalability and privacy is solved. Relevant:
You'll find yourself on the business end of a "constructive possession" or "readily convertible" style regulatory situation, the only variable is how long it takes until cases are frequent enough for the Feds to look your way. If you're American, you could run into trouble for operating an unlicensed money transmitter, accessible by individuals on the OFAC list, which as soon as OFAC became aware of going on, gets you on the list til you can prove you have process in place to not do that. Hell, they'll probably crank out a static analysis tool for smart contracts matching and or similar to what they've sanctioned, do some digging on the hits to determine if it is structurally equivalent, then on the list it goes.
We're talking OFAC here. The executive is tasked with full discretion to regulate how foreign entities interact with money transmitters operating under the jurisdiction of the United States. They don't have to prove squat. You have to prove to them you are legit.
Everyone that runs an Ethereum full node; they're the ones operating the laundering service. They run servers that store all the transaction records on their hard drives and do the processing of the ZK proofs allowing funds to be redeemed. Those are the people you have to stop if you want the service to go away. In this scenario, I as the contract deployer can do nothing whatsoever to stop them.
If so, it doesn't surprise me that the US gov wants to sanction and ban it.
I don't buy any argument that hinges on:
* Someone stole my money. * But they used a privacy enhancing service to hide it. * So the authorities have no recourse.
If someone uses that service for legitimate reasons knowing that the people who steal money are also using then they just have to live with the fact that their privacy means they can't prove they weren't the ones who stole it.
The resourse can't be
* ban the privacy enhancing service
If cash were introduced today, it would be banned under that principle.
Real privacy means criminals will use it. That's the price society pays to not give the government enormous surveillance powers.
If all communication apps had a backdoor for government surveillance, and one was introduced with E2E encryption, at first, criminals would disproportionaly flock to it, and you could very well argue for it to be banned under the principle you espouse. Thus you would strangle every privacy solution in its cradle before it has had a chance to become mainstream.
Proving your innocence is not how the criminal justice system works in the US. If you have stolen goods, it's on the government to prove that
A) they are stolen
B) (and to criminally convict you) that you knew they were stolen
It's very hard to argue that you didn't know your funds were inextricably mixed up with those illegal funds because that is the a major purpose of a mixer. Choices like those have consequences. Falling under sanctions is one of them.
Of course you may consider one _knows_ launderers will be helped but have no _intent_ to help them, which may be true of the interstate road crew, bank tellers, or a user of Tornado Cash.
So no, your analogy doesn't even remotely apply.
A lot of illegal activities happen over email. That doesn't mean the government can require everyone to give them access to their email so they can monitor it just in case crimes are committed.
What you're advocating for is the surveillance system China has setup where the government has a back door to access every social media post, every mobile app, every security camera, etc. Any companies that don't comply (Facebook, Google, Twitter, ...) are banned. They make the same claims that you did that "it's in society's interest" for individuals to give some of their privacy and freedom because the society has a vested interest in this information.
I don’t want to pay them from my primary account with (potentially) millions in crypto visible thus subjecting me to a $5 wrench attack
So instead I have a “payments” hot wallet and use Tornado cash to disburse funds from my cold wallet for paying things while obscuring my total net worth/lifetime transaction history.
This is perfectly legal and moral.
Edit: incase this wasn’t clear the above is purely hypothetical.
Exactly this is happening here, and not in a rhetorical way. And the US government have, you know, guns.
Why would this be expected? Cash is decentralized. That didn't prevent countries from sanctioning things.
Ethereum isn't being sanctioned. Tornado is. If you transact with Tornado, you're in violation of the law. If you don't, you're not, whether you use Ether or not.
> if the government said “we’re now keeping a database of cash serial numbers that are hereby banned” would everyone need to install the “cash checker” app and scan each bill they receive?
Law enforcement has long used marked bills [1]. The cash isn't "cancelled." If you randomly end up with one, you're fine, in the same way that if you unknowingly end up transacting with a wallet that transacted with a wallet that touched Tornado, you're also probably fine. But if your garage has a box of marked bills, or if your wallet did a big transaction with another wallet that does lots of Tornado activity, you're going to be on law enforcement's radar.
It’s that grind which is fatal for mixers, not unlike Tor exit nodes. Nobody _needs_ to use them except money launderers but they depend on benign traffic for concealment. Even most privacy-minded people are going to hesitate if it taints their ability to make transactions with regulated businesses and the less innocent traffic there is, the more likely it is that using one will attract scrutiny, accelerating that feedback loop since most people don’t want to deal with the risk even if they are totally innocent.
The other level to consider: this mentions DPRK. That means all of the intelligence agencies could be involved and that increases the odds that a mixer is compromised or even run by them as a honeypot. Think about how you can decide whether to trust one, and whether the odds are that you’re signing up for additional privacy invasion like the people who’ve used certain messaging systems or VPNs.
Fixed it for you. There's a tendency, particularly in the USA for people to assume that their law is universal
There is a huge difference between what can be done with paper money vs numbers on traceable bank account.
But crypto cannot be physically inspected at international borders. So for the government, just like wire transfers, they want to know the source and recipient of such funds. If there were a service where you could bring a large amount of cash, obfuscate the origin, then wire it to a bunch of bank accounts under criminal control, that would be the definition of money laundering and also cracked down on.
In this case if Coinbase took some BTC that went through Tornado it would be equivalent to taking a wire transfer from a bank known to be laundering money.
https://www.fincen.gov/sites/default/files/shared/fin105_cmi...
>CBP regularly uses cash sniffing dogs for this purpose.
The dogs are just probable cause generating machines. Had one of these dogs "sniff my asshole" and the agents got a warrant for me to forcibly be taken to the hospital to be "internally examined." (and I was sent the bill by the hospital, both ERs they took me to ~60 miles apart even though I never consented to any of it) The dog never alerted. It's just cover so they can get a warrant whenever they want.
Yeah I'm aware it's illegal to not report on the way out, I'm only saying it seems unlikely criminals doing that are going to get caught.
Most people have probably deposited a counterfeit bill and never known it too. Again singular bills are not a problem. They just tell the secret service to keep an eye on that locality and potentially contact businesses that saw the counterfeits come in assuming those businesses didn't flag it themselves.
This database exists, but only banks and police evidence clerks check cash against it.
> Cash itself has never been sanctioned though?
Most countries have a strict limit on the amount of cash you're allowed to carry over the border.
I recall something like that happening when I was younger. This was long ago, in the pre-Internet days, so unfortunately I haven't been able to find anything about it online; this is only my distant recollection.
There was a theft of a large amount of new bank notes, which hadn't yet entered circulation. The government distributed a list of the ranges of bank notes (since the notes were newly printed, they were in large sequential ranges), and every cashier in the whole country (for instance, in supermarkets) had to check every note they received against that list; since the notes in question hadn't entered circulation yet, they could be treated as if they were counterfeit.
(Since as far as I recall this happened back in the hyperinflation days, and the whole currency has been replaced one or more times since then, there is no longer any need to check against that list.)
And yes, taken to an extreme it does indeed mean that every coin becomes inaccessible given enough time. Welcome to the real world consequences of interacting with systems that are counter to wider societies aims.
I don't think there's good evidence that this is counter to broader society's aims, just that it's counter to the power of the US state (which always wants its power to grow).
In fact history shows that these rules are almost all dictated by a small group of people with little to no public input. Over a hundred years ago none of these laws existed and society survived. 100 years from now I doubt these concepts will be widespread and society will still function well.
If you're really trying to argue that, you should argue that tradfi banks should be unregulated. Then you can get your money-laundering done even more cheaply than inefficient decentralized protocols can manage.
Precisely, I do think tradfi banks should be unregulated, with full knowledge that will enable more efficient "money laundering" for some (of course for many of the consolidated powers that be that suck up power when the small guys are blocked, it's no different at all)
>It makes no sense to say that some organizations are behaving badly, so we should give up trying to regulate all organizations.
Blocking all users of Tornado Cash because of some organizations that behave badly is exactly the kind of logic you're impugning with your statement here. We shouldn't give up on all Tornado Cash transactions because some are bad. You contradict yourself.
That's a strange interpretation of my words. TornadoCash allows DPRK to steal from Americans and use that money. We shouldn't throw our hands up in the air and say there is nothing we can do about it. We should instead prevent anybody from transacting with funds laundered through TornadoCash via regulation. This removes DPRK's profit and affects normal people by some amount approximating 0.
If nobody will accept their laundered coins, how do they profit?
> The American who uses Tornado Cash to firewall their hot wallet from their cold wallet.
That provides no benefit to society and causes plenty of harms. Working as intended.
I don't think there's any evidence sanctioning Tornado Cash closes off laundering options for DPRK. Washing through privacy coins come to mind as an alternative. Very easy for DPRK's government mechanism to learn while being much more a hassle for the average American who barely has time after work/kids/training etc.
>That provides no benefit to society and causes plenty of harms. Working as intended.
Privacy definitely provides benefit to society, including not letting everyone know how much money you have to spend in your cold wallet every time you spend from your hot wallet. In fact I'd argue more violence could ensue if criminals could easily discover who had large cold wallets through lack of privacy, as many would choose to simply go on targetted knee-cap breaking operations until the key is given up.
Those other methods can be shut off too. That isn't an argument to leave known laundering options available.
> Privacy definitely provides benefit to society, including not letting everyone know how much money you have to spend in your cold wallet every time you spend from your hot wallet.
Don't use technologies that have no advantages and only disadvantages. When I spend with my credit card, the merchant doesn't know how much money I have, and my transaction goes through nearly instantly with negligible energy usage.
But that wasn't the argument you made. Now you're moving the goal posts. Sanctioning Tornado cash doesn't remove DPRKs profits as you claimed. I also doubt all methods can be shut off, or that it makes sense to cut off all "US Persons" just because DPRK uses it the way we don't like.
>Don't use technologies that have no advantages and only disadvantages. When I spend with my credit card, the merchant doesn't know how much money I have, and my transaction goes through nearly instantly with negligible energy usage.
When I use my credit card to buy say metal bullion online, I'm charged a huge markup if I pay with credit card. There are times when I don't want to pay the credit card markup and things like cash aren't always easily usable online. I don't even like spending crypto but I've paid for bullion with crypto online merely because it happened to be the lowest fee option for me with fast clearing. You don't know that for everyone crypto always has no advantages in their options.
How is it not? TornadoCash is used for laundering DPRK's ill-gotten gains, so we sanction it. Now anything they sent through TornadoCash is not usable. If anything else is used to launder their gains, we should sanction that too.
> When I use my credit card to buy say metal bullion online, I'm charged a huge markup if I pay with credit card.
Bitcoin does not remove the reason (fraud risk) you are charged that markup. As soon as regulations apply, everything that causes that markup to exist also applies to Bitcoin. On top of that, you have Bitcoin's high transaction costs, and completely public transactions.
You stated we removed their profit by sanctioning Tornado Cash. For one I don't think you have evidence sanctioning Tornado Cash eliminates profits of North Korea. There's also quite a few other ways, and only by moving the goal posts of saying we also shut off all those other ways of gathering profits could they be shut off. Which of course is both arguably infeasible, and not what you said.
>On top of that, you have Bitcoin's high transaction costs, and completely public transactions.
I didn't pay with bitcoin, I paid with LTC where my transaction costs a penny, plus or minus a penny.
>Bitcoin does not remove the reason (fraud risk) you are charged that markup.
That's nice that credit card premiums include fraud protection, but I'm not interested in paying for that with this vendor. It is one I very much trust, and even though I may even benefit from fraud protection I prefer not to have it. The vendor and I am in mutual agreement that I agree to give up my crypto with little chance of recourse, and I trust they will provide me the product. Sure, they may not make good and I may not have any good recourse, but the vendor and I have consensually made that agreement together with our own benefits in mind. In this case no fraud protection is a great benefit for me personally as I don't pay premiums for a service I don't want.
The profit from the crypto that they stole or received as ransom payment. I thought that was very clearly implied.
> I paid with LTC where my transaction costs a penny, plus or minus a penny
That addresses one of the two problems with paying with BTC, remaining worse than tradfi payments.
> That's nice that credit card premiums include fraud protection, but I'm not interested in paying for that with this vendor. It is one I very much trust,
That's nice that you trust the vendor, but fraud costs are about whether vendor trusts you. If you pay them in stolen goods, those will be seized, and the vendor will be out bullion plus transaction costs.
Tornado Cash is not the only way to launder ransom payments, so wrong again.
>That addresses one of the two problems with paying with BTC, remaining worse than tradfi payments.
Worse for some conditions, and not for others.
>That's nice that you trust the vendor, but fraud costs are about whether vendor trusts you. If you pay them in stolen goods, those will be seized, and the vendor will be out bullion plus transaction costs.
The vendor chose to charge me a lower fee for crypto than for credit. Perhaps the vendor failed to charge the appropriate amount to cover their fraud risk, but nevertheless in the transaction I found crypto advantageous. If you think they're wrong, feel free to offer your consulting services to APMEX and your expertise on selling bullion.
Source? Paraphrased from what the other commenter said: Um, no.
Except I'm not because it applies to 'US Persons' which for US citizens applies to them anywhere they are on earth or even on another planet. Also to not be a US citizen requires paying what is for many people a prohibitive exit tax of thousands of dollars to renounce. That is, you can exit society and still run afoul of the law.
False ditchotomy. Remember the mafia? They operated and operate at scale with or without tumblers.
> foreign governments stealing from Americans.
I'm a bit confused as to how you think banning tumblers moves the needle on this... Seems pretty negligible.
Should it be legal to offer, or use, a service that masks the origin and destination of currency transactions from law enforcement who have obtained a proper court order.
Don't kid yourself, the tech/crypto crowd is not anywhere near average sentiment.
It's not moving the goal posts. It's just the real world.
The principle at hand here is if online transactions ought to have a floor on visibility by law enforcement higher than using cash. So there are other versions of the question that would get you different answers.
> Should phone carriers be required to divulge text messages to law enforcement who have obtained a proper court order?
vs.
> Should government workers be allowed to spy on your dick pics?
...said every totalitarian government in history
The announcement says they are sanctioning 40 addresses associated with Tornado, can't those addresses be cycled out of commission and a new set be put in place?
That gets harder when the employees start getting arrested, the bank accounts Tornado uses to pay them start getting frozen, domains seized, et cetera, at Tornado and at every identified wallet that transacts with it.
You don’t. You just keep nailing people to touch it. Sanctions make things difficult for someone. Nobody expects them to e.g. poof Pyongyang.
This is much more like a pandemic than a war. In a war you know who your enemy is, you can see them making preparations and organizing forces, and you can counter them with your own moves. In a pandemic, somebody sneezes in Wuhan and 10 million people die. Any attempts to regulate folks who might've touched dirty things just piss people off.
A nobody spinning up their own copy of the contract may have trouble attracting the volume. If this becomes a significant issue, the treasury can expand the sanctioned entity definition to include to any smart contract that uses the code from TC. Or automatically scan for such addresses and update the list of aliases for the sanctioned entity. Or several other approaches.
You don't get it. Everyone says "OFAC may I <transaction info>?" OFAC implements services to take that info, and check it against their list and generate an answer real time. They can also update the list real time, and being centralized, every integrated processor starts giving that new entry the ol' deposit only treatment.
All OFAC needs is a scanner for what might be a hit, they preemptively add it to the list, do further digging in case it's a false positive, and still get the outcome they want. An effective brake on suspicious or possibly sanctioned individuals access to the financial network.
OFAC isn't stupid. They have the architecture of the financial network literally working for them in this case.
Decentralized doesn't mean squat with a fully public data structure that a centalized entity can real time declare chunks of off limits for a sufficiently large swathe of potential endpoints.
There is no penalty to a false positive by OFAC, or any of the service providers it oversees, btw. As that error case is handled by information collection and resubmission by the service provider to OFAC for re-analysis. The deck is stacked pretty much entirely in OFAC's favor.
Let's say your public address is public, all your net worth is there. A tainted account can send a small amount to you, nothing you can do about it. Is your account now tainted as well? If yes then bad actors now have a powerful tool of wealth destruction.
You violate sanctions if you transact with a sanctioned entity. It is that simple.
If the NFT owner accepts coins from a sanctioned address, then yes, they have violated sanctions.
You sound like one of those devs who shunned Dropbox because it's just a simple internet backed up folder you could implement with rsync and some python.
The world isn't that simple and if these "simple rules" turn out to be too complex to easily reason about we as a society will just ignore them.
Yes, this could have some complicated implications for compliance with that law. This is why big banks employ thousands of people in their compliance departments. If you're in country [x] and you're transferring money, you have to follow laws on transferring money in country [x].
Now yes, if compliance is hard, observed compliance may be low. This affects many laws on the books, and if it becomes a problem for regulators, they may take further action to improve enforcement, as they did with capital gains on crypto transactions at exchanges.
This has nothing to do with rsync/dropbox.
Road crew like many tornado cash users, they have no "mens rea" intent to aid money launderers, even though they have knowledge it can happen. By your below logic the courts find Tornado Cash user not guilty of "mens rea" money laundering.
>Edit to reply to your edit (why not post a reply?): that's exactly why they have been added to the sanctions list explicitly, rather than prosecuting users for money laundering.
Awesome, roads used by money launderers should be sanctioned as well so "legitimate" users can't use them either, everyone who built them knew they would be used by criminals and so do the people paying the fuel taxes that maintain them so criminals can drive on them. I'm replying this way because I've run out of replies (I can only reply 5 times per 3 hours).
Edit to reply to your edit (why not post a reply?): that's exactly why they have been added to the sanctions list explicitly, rather than prosecuting users for money laundering.
https://home.treasury.gov/policy-issues/financial-sanctions/...
> As a business accepting Ethereum, how do I know whether my customer has used Tornado Cash in the past?
Why does that matter? You need to make sure you don't break sanctions. You don't have to worry about other people.
Are you not phased at all by the inaneness of it?
It could be that they have enough parallel information that they know who controls these addresses and they're just waiting for someone to violate these new sanctions :)
So they make up a law that will basically force people to chose between losing their life savings or breaking the law. Some people will rightfully ignore the law and recover their money. The OFAC can now arrest those people...
I mean it's not impossible but I find it hard to believe that the OFAC would be that morally bankrupt.
I’m finding it a little difficult to put into words succinctly but as an example, they’re still going to after e.g. Coinbase: the big guys. They’re not gonna track down every party interacting with any mixer and prosecute because that’s hugely resource intensive. But now when they go after e.g. Coinbase, they have a new tool in their belt. (IMO IANAL.)
To employ in the U.S., you have to report what you paid people to the tax authorities. The employer can employ and do commerce on condition of compliance and the good grace of government recognition. Individuals, in the end can do whatever they want as long as the paper trail is managed by the economic machine.
No. Guns and bullets are decentralized, but murder is still illegal. Law enforcement agents can investigate crime committed using crypto just like they can investigate crime committed using any other instrument.
It would be interesting to see what U.S. Treasury will do.
What I saying is that just for $10,000-100,000 you can literally taint 90% of crypto ecosystem.
Also fact that every coin is tainted is a good reason to demand absolutely all data possible from CoinBase and other companies.
Not being able to decline a transaction is a design flaw for crypto. This will push people towards fixing it
So there are a lot of reasons why this will be used against random people.
Since this is a decentralized application running as an Ethereum smart contract with IPFS[1] interface, the move will not actually deter any state actors from using this, but will criminalize and stigmatize regular users who want to anonymize their Ethereum transactions.
The end result may be as the government wants: force users back to fiat so they can maintain maximum control of funds, and anyone left in the mixer is default a criminal.
[1] ipfs://QmU3j1B1UagFbfqgwWBu3yk1La657y8hoGoA24fG3QpPjf
This doesn't actually sound so bad.
If you seek transactional privacy, then maybe don't use global systems. Try back alley instead.
One compromise would be a US-based smart contract mixer that provides strong privacy but allows the US government to request transaction history in extreme cases. These addresses can then be sanctioned, frozen by USDC and barred by all regulated CEX.
I would rather see the US support privacy, but if they refuse to allow their citizens the right to financial privacy, then at least they could provide better systems for regular users to keep their crypto transactions private from the entire world.
This is only true in the tautological sense.
Crypto mixers are outlawed > All users of crypto mixers are therefore deemed outlaws > Only outlaws use crypto mixers.
An otherwise innocent person who has never heard about the sanctions may continue to "launder" their crypto unawares because they don't want everyone they transact with to know their total balance. I would not consider them an outlaw but they may be in for a nasty surprise now.
https://www.psychologytoday.com/us/blog/ethics-everyone/2018...
Does it mean people like me who use it so Coinbase can’t track my wallet activity are going to have our wallets banned since we used tornado?
In real world it's most likely gonna be used mostly against big transactions and to go after crypto exchanges.
Cell phones are used in laundering. Let’s ban cell phones.
> In addition, any entities that are owned, directly or indirectly, 50 percent or more by one or more blocked persons are also blocked.
> All transactions by U.S. persons or within (or transiting) the United States that involve any property or interests in property of designated or otherwise blocked persons are prohibited unless authorized by a general or specific license issued by OFAC, or exempt.
> These prohibitions include the making of any contribution or provision of funds, goods, or services by, to, or for the benefit of any blocked person and the receipt of any contribution or provision of funds, goods, or services from any such person.
(Formatting added because I’m not a moron)
Seems like you can continue using it if you’re not in the US, not transacting with someone that is and not with anyone on their sanctions list?
Assuming the operators aren’t in USA and aren’t running transactions there. If this is a decentralized app, how is a miner supposed to avoid crunching these processing cycles?
Not a lawyer
And not in a country that extradites to the U.S., or every planning on going through one. Or using U.S. dollars. Or the currencies of its allies.
This is OFAC. Violating its sanctions is akin to doing business with North Korea or Iran. People do it. But you're going to have a different lifestyle.
Could a Canadian continue to pay their Canadian neighbour for mowing their lawn through tornado or not?
They’d get arrested and lose all their money. So in practice, no.
What? These powers emanate from trading with the enemy and other wartime acts [1]. Violating sanctions can literally authorise U.S. military countermeasures.
Tornado helped Pyongyang finance its missile programme. That’s the colour of law we’re discussing.
[1] https://en.m.wikipedia.org/wiki/Office_of_Foreign_Assets_Con...
Which seems to leave a lot of transactions, like a non-sanctioned non-American paying another non-sanctioned non-American for something with mixed crypto entirely off of US soil. The sanction doesn't appear to apply against that.
Sure. You will be a fugitive from American law for the rest of your life. But plenty of people make a living in that category.
As I understand, this is why an American in Europe can have a hard time creating an account. In order to operate in that country without triggering treaty clauses, there has to be a technical or process measure to keep U.S. customers abroad out. Otherwise that state is obligated by treaties to consider that business in breach of U.S. sanctions.
Only US persons faces criminal prosecution for sanction violations. Non-US persons face secondary sanctions which is still quite serious penalty.
Not true. Anyone in U.S. jurisdiction faces criminal prosecution. That's a far more expansive set than U.S. persons.
So if your country won't play ball with the US, you should be fine. But if you're in pretty much any industrialized country, it's probably not worth the risk.
edit: It's a russian guy, in russia, so in practice might be more like a strongly worded letter. Downstream effects are more like financial institutions are going to block assets that appear to have gone through this mixer, but I have my doubts that that is practical, especially if the mixer ups the complexity.
What percentage of actual on-chain transactions are not illicit is another question.
Remember, the most privacy-preserving way of trade is dealing with cash, yet no one sees it as "criminal."
The police need, within certain guardrails, to be able to search private property for evidence during investigations. Civil suits are going to require some element of discovery. Tax authorities are going to need to perform audits. Your landlord is going to need to come into your apartment to fix a leaking pipe if you're away.
Laundering cash is illegal too!
There is an idea of balance of interests between the individual and the society. This is why for example your employer has to report salary data directly to the government but there are laws in place that control who else they disclose that too and under what circumstances. See also, for example, sex-offender registries, census gathering, etc.
NB: I'm not offering comment on whether or not the balance on those cases (or others) has been made correctly, just pointing out that it is a generally accepted concept in modern "western democracies" at least, and seems to be held by the majority of citizens unless you get pretty deep into the tails.
Of course, this is an easy example with an obvious right/wrong. In the real world situations are all over the place, so our goal should be to constantly strive to find a more perfect balance.
The right to privacy doesn't mean you can facilitate money laundering with impunity. Just like my right to privacy doesn't mean I can blind everyone in a shop if I don't want them to know what I'm buying.
> Remember, the most privacy-preserving way of trade is dealing with cash, yet no one sees it as "criminal."
Try to buy a one-way airline ticket with cash and see if you don't have suspicion fall upon you.
"Sir are you carrying more than .5 bitcoins in a physical wallet on your persons, 10,000$ in cash, illegal drugs or cigarettes?"
Except for, ya know, when you launder that cash, kinda like what Tornado does...
"Laundering" cash means making declaring fraudulent income from a business to make the cash income look legitimate. From the perspective of the tax authorities, it doesn't matter whether you have the "same" 100 ETH you had on Thursday, the question still remains whether you have undeclared income.
This is more like... depositing hundred dollar bills at a bank, and then withdrawing different ones from an ATM.
The government seizes cash all the time for no other reason than the cash itself existing.
Between 2000 and 2016, CBP and other DHS agencies conducted at least 30,574 currency seizures at airports, taking over $2 billion in total. Over two-thirds of all cases involving currency seized at airports were not accompanied by an arrest. Sources: https://www.washingtonpost.com/local/trafficandcommuting/hom..., https://ij.org/report/jetway-robbery/
The #waroncash is real then?
Of course, there is a large spectrum of cases here with many outliers.
I am sure there were a few mistakes made across those 16 years and 2 billion dollars.
Civil asset forfeiture needs some reform. Even if you go to court you need to prove your innocence - a much higher bar then traditional court cases.
It is a popular theme for Turks working in Germany having their cash seized by Serbia on their way to a vacation in Turkey. This is because, the Turkish diaspora in Germany is predominantly blue collar due to the nature of their immigration(long story short, many years go Germany requested workers for their factories, many Turks took the opportunity) and they have a lot of opportunities to deal with cash and not pay tax on it.
Essentially, Turks who do "tax-free" business buy properties in Turkey and there's a common fraud to claim benefits because on the books they look very poor, so they definitely don't want that money to go into the books and the Serbian police apparently caught up with it.
Anyway, the fraud is about to be solved not by seizure of assets but by data-sharing agreement between EU and Turkey, the Turkish banks and the state will report the properties and assets to EU&UK for anti fraud purposes. There are many pissed off people about it.
That being said, I think there are more pervasive rules in our society that makes these seizures mild in comparison. Using the numbers you posted, that's $65k per seizure. Individuals carrying around the median annual household income is much more suspect than the $10k deposit limit that must be reported to the IRS. If law abiding folks get hassled for $10k, then $65k is obviously questionable. I think banks should not have to report anything but at the very least the limit should be $1M. $10k is a good day (Christmas, Black Friday, etc.) of sales for many regular people. Hell, even bartenders can make $10k in tips over the course of months not even years.
However, your right to privacy ends where money laundering and fraud begin. These are real problems that get in the way of catching criminals, and not just simple fraudsters and other non-violent liars.
Every paper bill has a unique serial number that gets tracked by banks to trace stolen money. I don't know about any dedicated privacy companies that will take your money and exchange it for random bills of equal value, but if they exist I'd expect the police to have an interest in them, and for good reason. Sure, you could use "privacy" as a reason to visit them regularly but I doubt you'll convince anyone.
And bills probably shouldn't be serialized for that exact reason. My right to privacy is more important than anybody's right to feel "safe" from the evil bad guys. The correct answer to stopping crime is to stop crime, not to weaponize our financial system and remove civil liberties.
Should gov also scan every photo on your phone for criminal activity? Install cameras in your home? If your right to privacy ends when there is potential for crime then you'll have no privacy at all.
You would need to make the follow up argument that crypto should be treated like cash for some reason.
Privacy is not, has never been, and will never be, equivalent to full perfect anonymity.
> privacy - noun - the state or condition of being free from being observed or disturbed by other people.
We have the right to privacy and this is what privacy means.
One thing I've done when talking to cryptobros and other privacy extremists is ask them to think back to a time (and we all know they've all done it) when they railed non-stop against the "banksters" and consider how much more power and influence they would have if the rules they themselves want regarding privacy are applied evenly to all circumstances.
There are a few people, and I'm inclined to believe them, who say "yeah Capital One and Deutsche Bank have the right to mask their cartel money laundering activities under the concept of absolute anonymity and any attempts at know-your-customer or records-keeping requirements for banks are antithetical to freedom" but they are very rare.
Again, I believe those people are being earnest because I know extremists exist for every position.
But most people just shout "THAT'S DIFFERENT", get angry, and call me a boot-licker or something like that.
edit: another scenario I use is:
Privacy-conscious business owner: Hello yes, I would like to start a business selling car seatbelts whose webbing is impregnated with a fire retardant that we know will cause fatal cancer.
Evil Government: Ok, please fill out this paperwork to get a business license and provide points of contact so people can sue you when they get cancer from their seatbelts.
Privacy-conscious business owner: No. That is a violation of my rights. I have the right to perfect anonymity.
Evil Government: I suppose you've got us there! Have a nice day.
> Again, I believe those people are being earnest because I know extremists exist for every position.
Indeed. I hear a lot of this rhetoric from both crypto maximalists and crypto skeptics and both of them always argue in very absolute terms.
I can agree that regulators won't allow privacy coins like Monero and tools like Tornado.cash to succeed and are already de-listing, banning them from exchanges. It also doesn't mean that these cryptocurrency or projects will 'all die in a fire' or 'totally go away' entirely. The same is true for crypto maximalists who also believe that it will 'take over the whole financial system'.
I'm already convinced that (some) cryptocurrencies and (some) crypto projects are here to stay.
They get eventually caught, and substantial assets are recovered - real estate, jewelry, art, luxury yachts. Not all. But in a world of fully anonymous crypto, these guys would either never get caught, or would vanish into thin air with their Ledgers, and that's that.
I used to think, haha, crypto, buy some drugs with it, but this really scared me. I'm not anti crypto, and I quite like the technology, but this kind of "mine and no one else's business" attitude terrifies me.
Think about the children!
ring signatures
signed, n people in a chain of trust that is m long
stop fighting, you're not going to win :)
You actually can't really stop privacy enabled cryptocurrencies. By all means, I'd like to see a concerted effort to do so. (Because poking the bear will just fuel more cryptographic innovation that dodges control :P)
Well, you're going out of your way to make sure that North Korea can buy stuff with their stolen money, by letting them say that it's yours.
This has zero impact on peoples' ability to use the service. Just chain hop a few times with privacy coins if you want to cash out on a cex
https://www.coindesk.com/tech/2022/04/15/sanctioned-crypto-w...
Tornado cash is used by people who buy crypto on centralized exchanges, want to take private self custody of their crypto without the CEX or other entity spying on them.
I would say Occupy got at least to step 2 or 3 before they gave up.