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Comment by brk | Hacker News Reader

I'm not an expert on this, but I think it comes down to Tornado being primarily associated with fraud/crime related transactions. Similar to Silk Road being shut down while Amazon was left to grow. Both had some percentage of fraudulent products, but only one was viewed as existing primarily to facilitate fraud/crime.

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According to this source, about ~20% of the value that has gone through tornado cash is thought to be criminal proceeds.

[1] https://techcrunch.com/2022/08/08/treasury-tornado-cash-laun...

How much of it the hiding of otherwise-legal income? If the figure is closer to the difference between 7 billion figure and the 1.5 billion of sanctioned money then it’s only a matter of time before the treasury justifiably comes after them.

Laundering clean money is generally actually legal (subject to otherwise obeying relevant laws, and not trying to defraud people).

For example, if somebody who owns several private businesses, including one that people frown upon but that makes them a lot of money (think producing legal pronography), but have their businesses interact in such a way that to most people it looks like they are making most of their money from real estate investments, that is generally fine as long as they follow applicable tax laws, don't try to bypass the government's anti-money laundering controls, and are not trying to defraud others by saying something like "Look how much money I'm making from real estate investment. Your investment firm should hire me."

But here we had a mixer service where an estimated 20% of funds it hides were criminal in nature. It is not legal to knowingly facilitate criminal money laundering. If viewed as an unincorporated association operating this service (which is how the treasury views this), and with that sort of proportion of its use being criminal, it is implausible that the operators did not know that the service was being widely used for illegal money laundering, not just the legal kind. Because of this, the operators had a duty to modify the service they offer to make it harder to use for illegal money laundering, or to shut the service down entirely.

If you want to run a smart contract based mixing service like this, you pretty much need to design it to only accept funds that someone has verified are not criminal proceeds. Perhaps you as the operator does the verification, or perhaps to avoid centralization you allow for a variety of trusted organizations to verify lawful nature of the source of the funds, with each organization after verifying creating some form of signature for the mixer user to submit along with the funds to avoid the transaction getting rejected.

> Because of this, the operators had a duty to modify the service they offer to make it harder to use for illegal money laundering, or to shut the service down entirely.

You don't seem to understand how smart contracts work. You upload the code and it lives on forever. Unless you code a way to shut it down or modify it there is no way to do so.

Tornado cash the app on Ethereum is still alive and well today and will probably be alive and well in 2100.

Tor is primarily associated with crime. Doesn’t mean we should throw away privacy tools and submit to surveillance state.

id take the bet that 10x more crime happens over WhatsApp chats than tor and ethereum combined

I would encourage anyone who considers making an argument that X is associated with $bad_thing, consider that you usually only believe it's associated because of powerful propaganda/marketing has made it seem so.

No. Tornado is not primarily associated with fraud or crime.

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