Comment by rattlesnakedave | Hacker News Reader

Comment by rattlesnakedave | Hacker News Reader

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rattlesnakedave

I take issue with the claim that tornado can “effectively launder money for criminals.” All it can do is leave you with an asset with a less-than-clear on chain history. If you want to cash out, you still have to explain how you wound up with 100 ETH or whatever.

Exactly. I hate this false idea that TC launders your money.

Your TC money isn't any more laundered than a pile of cash you got by selling meth.

Laundering means making up some origin for such money (such as a business).

Kinda. Money laundering consists of placement, layering, and integration. There is a (very weak, imo) argument that TC can be a part of the “layering” process, but it certainly does not do all three.

North Korea laundered a billion dollars through Tornado https://markets.businessinsider.com/news/currencies/north-ko...

If that's true, then it can't launder money very well can it?

Definitely feels like a false narrative has been created by the fact they're able to point it out.

Like pointing at someone and accusing them of hiding, but the very fact you can point them out means it's either not actually happening or not happening very effectively.

Anyone can see what amount of money one address has put into Tornado Cash, so it’s no surprise that we can estimate how much money North Korea has put in. The whole reason they do put that money in, though, is so that they can have a different account take that money out, and have it not be clear where the money came from. For a sanctioned country, that output seems much more spendable.

It was very effective. The money went in, and no-one knows where it came out. BUt you can bet it went into thousands of clean, untainted wallets which were then used to cash out.

Yes, Tornado allows you to obtain ETH that is divorced from the original (potentially criminal) source. But exchanges and anyone with a block explorer can still see that your clean wallet received 100 ETH from the Tornado withdrawal address. Exchanges in America at least are supposed to consider accounts receiving funds from mixers as "high risk" and apply extra scrutiny/shut down accounts. There are exchanges in Hong Kong and most of the former Soviet Union that ignore these kind of rules but Tornado still doesn't really "clean" the money in the sense of giving you readily spendable money in a bank account. I guess it may be useful in the process of doing so.

It's extremely useful.

> Exchanges in America at least are supposed to consider accounts receiving funds from mixers as "high risk" and apply extra scrutiny/shut down accounts.

I believe there's a level (I think $3000) for the "travel rule"[1] to apply.

It's obviously easy to bounce the money through some "NFT sales" too if you want.

[1] https://www.fincen.gov/sites/default/files/advisory/advissu7...

Money laundering is comprised of three parts: placement, layering, and integration. The government here is attacking the “layering” part of the process that tornado _may_ contribute to (the norks still have to explain how they ended up with a billion of ETH). But to truly be “money laundering” you have to have all three elements. The equivalent here would be banning casino chips or something.

> equivalent here would be banning casino chips or something

If someone pays for a house with casino chips, and you don’t do your diligence on why they chose that mode of settlement, you’re rightfully exposed to legal risk if they were in fact laundering money.

> I take issue with the claim that tornado can “effectively launder money for criminals.” All it can do is leave you with an asset with a less-than-clear on chain history. If you want to cash out, you still have to explain how you wound up with 100 ETH or whatever.

ehhhhhhhh. you can play with asset prices and valuations to fix this.

you have a little clean money savings from your job right?

okay, great, with a little bit of dirty/flaggable money in a different address, launch an erc20 token and liquidity pool, add 100% of the erc20 to the liquidity pool.

now with your clean money, be an early buyer.

now with MORE of your dirty/flaggable money (other tornado cash notes withdrawn to different virgin addresses via the relayer), buy into the liquidity pool. this pumps the price of the token.

now with your clean money, sell. cash out, pay capital gains tax, move on. indistinguishable from any other crypto trader. bots and many others would have bought into the liquidity pool too as they have alerts.

everyone else can play amongst themselves in perpetuity, and it can't go below the initial price that you set when you launched the pool (in Uniswap V2 style liquidity pools, and just if you want to feel better about it). hey, maybe if it keeps running then your tornado cash funded addresses might be able to sell back into the liquidity pool again.

With this scheme you just dreamed up I wouldn’t even need Tornado.

you don't need, there is still benefit in unlinking the transaction history and normalizing that behavior.

virgin addresses funded by a third party relayer does that.

you don't want your $30,000,000 bridge heist funds to be buying a newly launched token. you want a bunch of unknown sources to be buying the newly launched token, various identities.

edit: actually I could see the crypto community finding it hilarious and "aping in" knowing that a large buyer is supporting. easier to blend in.

> just dreamed up

Please.

"Explaining" is easy. You sold an NFT and they paid via Tornado.

The hiding is a real issue here.

Even if it does, who gives a shit? The interstate road crew happily builds the interstate, knowing money launderers use it without taking the slightest precaution to stop them. They cash their paycheck, knowing some of the money thrown in the 'mixer' of the treasury was the money of the money launderers paying their taxes that build the interstate.

The road crew is like the workers at an internet provider or maybe an isp, and the vast majority of the traffic is legal. That original analogy makes it seem like the verdict on tornado was already made, now we just need to grasp at arguments to support the pre-made conclusion. It backfires. Don’t shoot the messenger.

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