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Starting a money laundrymat and expecting not to get charged with a crime is a bit absurd. Pretending that it's totally fine because it's "privacy" not money laundering because crypto is special... is likewise absurd.

I agree, it's like saying the developer of ransomware shouldn't get in trouble for making it if they just made it public instead of using it themselves. The fact that ransomware could be used for legal purposes(pen testing maybe?) isn't really a defense when you make it easily accessible to criminals by making it public.

> it's like saying the developer of ransomware shouldn't get in trouble for making it if they just made it public instead of using it themselves

They really shouldn't.

Neither should any other security researcher who publishes exploits.

Neither should any other developer of cryptographic technology.

I think there is a difference between identifying an exploit exists and making a tool that makes it easy for anyone to exploit. I think if you are releasing a tool to act on security vulnerabilities it should be done so very carefully so that it can't be easily used to commit crime.

Big difference between writing a report on a vulnerability and writing malware that exploits it.

is there? what's the difference?

By that reasoning, gun manufacturers are mass murderers?

What about automobile manufacturers? They kill almost as many people as guns (in the US, quick google search)

Guns and cars have legitimate uses.

Money laundering, especially running a money laundering business which does not follow certain rules, is illegal regardless if some of the usage is legitimate.

frankly, I'd prefer more money laundering and less guns in the world if I had to pick one. fewer dead kids that way.

Starting a gun manufacturing company and expecting not to get charged with a crime is a bit absurd. Pretending that it's totally fine because it's "for hunting" not "murder" because guns are special... is likewise absurd.

You're unironically correct. I suspect you were aiming for sarcasm, but gun manufacturers being sued is an actual thing now.

Having a tool to shoot someone is a right written into the US constitution. There are a variety of circumstances where you are within your rights to use this deadly force.

Tools to hide the source or destination of funds, i.e. to launder money, are not legal anywhere and explicitly illegal in various ways. Providing them as a service to others is explicitly illegal.

Building, selling, owning, and using a gun are all legal in general, only specific ways of doing those things are not.

"legal" != "legitimate". the Iraq war was legal. banks turning a profit off the 08 crash was legal. slavery was legal. The constitution was written in the dark ages by folks that thought slavery was A-OK and it's a dead document. your government (ours,I guess, if you wanted to get pedantic) sucks, dude.

It’s more like you gave away a DIY laundromat kit for free, which some people used to make laundromats, and other people used to launder money.

Example of a “legitimate” use case for tumbling: your employer pays you in Bitcoin and you don’t want them to know where you spend the money they give you.

A public ledger means anyone can read it, not just the government. And so anonymizing your transactions means hiding them from everyone, not just the government.

It’s fine if you believe the government and your bank should be able to read your transactions. But what about your crazy ex girlfriend or the guy you fired last week?

If you don't want your transactions to be public, don't use a public ledger. You don't get to launder your money because you chose to use a ridiculous tool that made your transactions public and readable by anybody who has ever transacted with you or who can convince someone who did to tell them who you are.

Tornado Cash wasn't free, there was a fee which as I understand it was sent back to various developers.

Money laundering doesn't get to be something else and totally fine just because it's covering for a weakness of cryptocurrencies.

Crazy amount of misinformation in this one post:

> If you don't want your transactions to be public, don't use a public ledger.

That's exactly what people were attempting to do, with Tornado.

> You don't get to launder your money

There is no money laundering available with Tornado, it doesn't turn an illigitimate source of funds into a legitimate one. And it also has a compliance tool to allow proof of transfer between accounts.

> Tornado Cash wasn't free, there was a fee which as I understand it was sent back to various developers.

This wasn't sent to developers. It was a fee you would pay relayers to propagate transactions on the network and was optional. You could choose to fund withdrawals with a relayer or to use funds in your own wallet.

> Money laundering

This isn't money laundering.

>Pretending that it's totally fine because it's "privacy" not money laundering because crypto is special... is likewise absurd.

Privacy is definitely a legitimate use for something like Tornado Cash, what are you talking about? Hell, if someone found out what my address is and it's not in my best interest that this person knew about it, I would definitely use it just to move my funds to another address.

If you sell me a screwdriver and then I go and kill someone with it, should you be prosecuted for it?

There also seems to be a lot of conjecture all over here.

We know that the person arrested "is suspected of involvement in concealing criminal financial flows and facilitating money laundering through the mixing of cryptocurrencies through the decentralised Ethereum mixing service Tornado Cash."

The general interpretation is that they were arrested for development of the protocol and software. It may be that they have them on the hook for other actions, such as assisting particular individuals or directly handling funds. Let's see what comes out of this.

We don't yet know which specific acts they are suspected of.

The problem is it doesn't make sense to treat protocols like companies. And it definitely doesn't make sense to treat protocol devs as if they were the executives of those companies.

If the state can arrest people and cause activity to stop, it makes sense in the way states think.

The approach of bitcoin and crypto process in general hasn't been to ask permission but aim for a protocol that states can't stop. Neither governments nor "society" "signed off" on crypto. People just started doing it with the principle "this is too distributed to stop". Well, if states can stop it, that approach failed, right?

Analogously when joint-stock corporations first entered the scene it required the development of whole new branches of Western law.

Limited-liability enterprises still aren't very popular. But these were legitimized by courts and legislation based on them provide (alleged) benefits. Crypto generally hasn't been legitimized by society, crypto advocates often act like they don't need such legitimization and by that token, the state has no obligation not to treat crypto activities as being within it's existing categories - especially it this work: they don't like money laundering and fraud through crypto and hey, a lot of people going to jail.

>If the state can arrest people and cause activity to stop

We shall see if that's the case here. My guess is the state can't stop it

States can certainly control the behavior of ordinary businesses that operate in their borders. Maybe they can't directly stop some hacker somewhere from operating a mixer but if coins from a mixer are as illegal as coins from some crime, these businesses won't want to touch.

I mean, the FBI has already shown it can see through mixers and arrest those who try to cash stolen bitcoins.

China has made sale or possession of bitcoin a crime but the West is following different road - with enough state intervention, bitcoin will wind-up a public money, less private money system than regular bank accounts. Every transaction is on the blockchain and that is public. Try putting that in your "anarcho-capitalist" pipe and smoking it.

>the FBI has already shown it can see through mixers and arrest those who try to cash stolen bitcoins

source?

My understanding is that the developers get a cut of the money that's laundered through tornado.cash

Isn't this kind of like the dev of SMTP getting arrested because two people committed a crime by communicating through email?

Or arresting Ron Rivest, Adi Shamir, or Leonard Adleman for helping criminals hide their communications from law enforcement.

this right here, is the crux of the argument

If they were getting a cut from whenever illegal activities were done.. maybe.

You do know RSA is a company too, right? What are the odds that RSA SecurID has been used by bad actors before?

https://en.wikipedia.org/wiki/RSA_Security

The difference is lawmakers have regulated money service businesses and have not regulated cryptography. If they had regulated cryptography, then yes making RSA available to the public could be a crime.

In my opinion, this (very popular!) line of reasoning is missing the forest for the trees.

A knife is widely regarded as a tool that's legal to own and that, save a few precautions, you can carry with you. Switchblades, despite being also knives, are widely considered dangerous and their sale and possession is overall restricted (presumably) due to a strong correlation between the presence of a switchblade and stabbings.

Just because SMTP and Tornado are protocols it doesn't mean they are the same - one is a protocol enabling a wide range of activities (some of them criminal, some not) while the other is literally designed to hide the origin of money, an activity that most governments frown upon.

That presumption would be incorrect

Communication providers are not required to obtain licenses and mitigate illegal content in the same way that money service businesses are required to mitigate money laundering. Some people think they should be! I don't agree. But it is a thing governments could do.

Let's be clear - this isn't money laundering. Money laundering is taking illicit funds and making them look legitimately sourced. Tornado Cash does not do this, it is clear that the source is Tornado Cash, and it does nothing to legitimize funds. To spend crypto you still most likely need to convert it to fiat and that fiat money will still be under scrutiny for its source.

Exactly, everyone is missing this. If anything using tornado cash is analogous to converting debit into cash.

It's maybe not making them look "legitimate" but it's definitely making some funds look a lot less illicit than they are.

It absolutely is money laundering- which has three phases. Placement, Layering, and Integration.

The Layering phase is when the original source of money is concealed through transactions or bookkeeping tricks.

https://www.investopedia.com/terms/m/moneylaundering.asp

Do you believe that financial or transactional privacy should be illegal? Obfuscation is used for many things not exclusive to money laundering.

"Placement surreptitiously injects the “dirty money” into the legitimate financial system."

Tornado Cash doesn't move the funds between financial systems at all

"Layering conceals the source of the money through a series of transactions and bookkeeping tricks"

The source of the coins is in plain sight - it's clearly from Tornado Cash, and when converted into fiat currency the source is very likely also obvious (some exchange) unless you do some in-person exchange of cash for coins, in which case this has nothing to do with Tornado Cash

"Integration, the now-laundered money is withdrawn from the legitimate account to be used for whatever purposes the criminals have in mind for it"

Again there's no legitimacy for the coins after going through Tornado Cash and the fiat currency is still under scrutiny.

Tornado is absolutely money laundering. You’re moving the coins from a dirty wallet that is being watched by the government to a clean one that has plausible deniability. It’s not the end of the process though, you still need to sell something to the wallet to make it look like you earned the coins legitimately. That’s where NFTs come in.

If you just go dirty wallet -> clean wallet -> exchange it’s trivial to see that the exchange coins came from the dirty wallet. If you mix the coins from the dirty wallet to the clean one there’s no way for the exchange to say the coins came from the dirty wallet, all they know is the coins came from the mixer.