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Comment by turdnagel | Hacker News Reader

This is definitely a pandora's box type issue. I believe it is different from the "code is speech" series of arguments around PGP because a deployed smart contract is not merely source code / compiled bytecode, but also a wallet containing funds. Of course, you still need the Ethereum "world computer" to make it run, and Tornado Cash is not very helpful without a significant amount of liquidity to sufficiently provide cover for people who want to obfuscate the source of their funds. These issues are likely to arise in court and I don't believe the conclusions will all be favorable to crypto supporters because I don't think the situation is as clear cut.

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When a smart contract is deployed, literally all that happens is that the code is broadcast to the network. It is true that the contract itself has a wallet and runs operations, but it operates autonomously outside the control of the person who deployed the contract.

If a smart contract does something illegal, the person who deployed it has no more responsibility than if someone does something illegal with encryption software downloaded from Github. The only responsible part you could really argue for is the Ethereum node operators, since they're the ones actually carrying out the illegal computation. But is the government really going to outlaw the Ethereum network?

Here's a thing: when technology is designed in a way that makes it hard to work within the bounds of the legal system, it's usually the case that the legal system wins, not the technology. The view of the legal system is focused around people and their intentions, regardless of how much you try and confuse things with technology.

They will most likely view the smart contract and its wallet as one entity, despite that being technically not how it works technologically. Because as many people have tried and failed to figure out over the years, laws are interpreted by juries and judges, not computers. Technological roadblocks are things they don't have any problems jumping over, and deliberately trying to add roadblocks like that with the imagination they're untouchable also tends to piss them off even more.

> when technology is designed in a way that makes it hard to work within the bounds of the legal system, it's usually the case that the legal system wins, not the technology.

If this was true, Internet pornography would have been successfully squashed by the existing obscenity laws that heavily regulated pornographic material.

It was, though? And continues to be. In the mid-90s, you could pretty easily find illegal material without looking too hard. It was already illegal by the Child Protection and Obscenity Enforcement Act, an early Internet bill which mostly said "illegal porn is still illegal, even if it's on a computer", and it also required producers of pornography to keep detailed records on talent & crew in the production. By the mid 2000s, large sweeps of enforcement happened, and thousands of studios without proper documentation and recordskeeping shutting down. The CIPA act required schools, libraries and public places where children could be to install internet filters, and make policies preventing children from viewing such material.

Pornography isn't illegal in the US, it's pretty well-regulated, and once the Internet started entering mainstream culture, it quickly adapted to the existing legal framework and culture that was already there.

This is, of course, a very US-centric view, but so is a lot of early Internet history, along with its culture.

> Pornography isn't illegal in the US

I'm sorry, but this isn't true. At the early onset of the web there were a huge number of state and local laws regulating obscene material. Many states even tried to explicitly regulate Internet pornography:

> Between 1995 and 2002, almost half of the states were considering bills to control internet pornography, and more than a quarter of states enacted such laws.[1]

Along similar lines, sex toys were prohibited or heavily regulated in a number of US states before 2000. The technological reality of e-commerce means that the vast majority of the enforcement of those laws became impossible, and sex toys are de facto legal in every jurisdiction in America.

[1]https://en.wikipedia.org/wiki/United_States_obscenity_law

> If a smart contract does something illegal, the person who deployed it has no more responsibility than if someone does something illegal with encryption software downloaded from Github.

If I rig up my car to explode when someone walks by whistling the right tune, am I without responsibility? I didn't blow up the car.. the car blew itself up.

Obviously I'm at fault. There is no debate here. Any automation you create is acting on your behalf - and you are liable for it. If I hire a hitman.. I am guilty of murder.

AI or software isn't some clever loophole here. If you deploy an autonomous money laundering system.. you are doing money laundering.

> If I rig up my car to explode

Mechanical devices are not protected as speech.

> If I hire a hitman.. I am guilty of murder.

SCOTUS has already carefully defined this in the Brandenburg test. Speech is only not protected when it results in direct, imminent lawless action. And SCOTUS has consistently ruled that the boundary for the test is extremely concrete. (Contrary to popular opinion yelling fire in a crowded theatre is actually protected by Brandenburg under the First Amendment.)

Sending a text message to a hitman telling him to "wack Tony at midnight" fails the Brandenburg test because it leads to imminent lawless action. But you can literally publicly advocate for an ideology to overthrow the United States government and murder millions of people, and that's Constitutionally protected because there's no imminent lawless action.

Writing and publishing open source software is Constitutionally protected, because the simple act of publishing software does not lead to imminent lawless action. Even if it's reasonable to assume that the software will likely be adopted for illegal purposes. Again this isn't hypothetical, SCOTUS has consistently ruled that the government cannot restrict the ability to publish instructions on how to make pipe bombs or 3D printed guns.

The person you're responding to wasn't making a "free speech argument". And I don't see how this is in way way a free speech issue.

He's saying just because you set up an ATM in the middle of a city and say, and then say feel free to wash your illegal cash here to do some money laundering.

The act of it being on blockchain and "decentralized" wont make a difference, anyone offering said "launder ATM" could be convicted of a crime.

An ATM machine is not protected as speech. Courts have consistently ruled that software is protected speech. So, yes blockchains do make a substantial difference because they divorce the act of writing software (protected by the 1st Amendment) from the act of operating the business around that software.

SCOTUS has consistently required an extremely high bar to regulating speech, so it's simply not enough to say "well we regulate this other non-speech thing, what's the difference".

An ATM isn't a dog either.

Executing code isn't free speech. The code may be. The execution not so much.

In the case of Tornado Cash, the person who wrote and published the code isn't the person executing it.

Contract devs don't execute the code. They simply broadcast the it to the Ethereum network. Deploying a contract is conceptually no different than publishing source code to GitHub. It's actually the Ethereum node operators that execute the code. (Hence why the contract devs can't stop a running smart contract.)

If you want to make the argument that the persons executing the code are liable, than it should be the Ethereum network nodes, not the developer who deployed the smart contract. As it stands, it's pretty unlikely that the Treasury department has the political capital or the operational reach to shut down Ethereum. And that's why blockchain is different.

Given that the treasury department has frozen Tornado, and generally made the whole project persona non grata, I believe your theory here is fairly thoroughly debunked.

Trying to find a loophole in the law by trickery is why we use human courts - the judge can still find you guilty and punish the living crap out of you for abetting money laundering.

> Given that the treasury department has frozen Tornado

They haven't though. Tornado Cash is still happily running. If you post your address here, some kind soul might even send you some ETH via Tornado Cash right now. They have asked regulated financial institutions to not receive ETH that came directly from Tornado Cash. That's it; that's all that they can do. While that puts a damper on people converting directly between ETH and USD at such institutions, it does bugger all for people conducting small/informal transactions

There hasn't been a court case yet. Not even a judicial hearing. The article we're commenting on is about how there's a very good chance that courts will disagree. This SCOTUS has repeatedly shown a willingness to restrict executive overreach in the Biden administration.

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