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Comment by JumpCrisscross | Hacker News Reader

> have never associated this with an intentional money laundering service

Most customers of a canonical money launderer, a laundromat, don’t realise it’s a front. That doesn’t matter if the owner is laundering money.

Tornado laundered money for North Korea [1]. (It announced this months before the sanctions, a period in which the developers could have reacted but didn’t [EDIT: in any meaningful way].) That it was also obfuscating legitimate flows is frankly irrelevant.

[1] https://www.bloomberg.com/news/articles/2022-08-08/crypto-mi...

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This is incorrect. Tornado devs blocked all OFAC addresses from accessing the frontend, which is the only power they had, since the contracts themselves are immutable. See https://www.coindesk.com/tech/2022/04/15/tornado-cash-adds-c...

> Tornado devs blocked all OFAC addresses from accessing the frontend, which is the only power they had, since the contracts themselves are immutable

Which does nothing in practice. Any AML lawyer would have advised them so. The fact that the service was designed to be incompatible with the law isn’t a get-out-of-jail card.

What would you say about Signal, designed to be incompatible with the law around lawful subpoenas?

> What would you say about Signal, designed to be incompatible with the law around lawful subpoenas?

It’s not. Subpoenas require handing over what you have. If you don’t have it there is no obligation to disclose. Signal may run afoul of data-retention laws. But there are no such requirements in America.

I read the lawsuit in question. None of the plaintiffs were arrested. Their issue is that OFAC overstepped the bounds of their statutory authority, which none of your arguments address.

I'm also not aware of what US law would have been violated by either

1. Coding and publishing the tornado source code

2. Deploying several instances to the blockchain in 2019.

There's no US prosecutions based on creating or operating tornado. The Dutch one has not charged the person they arrested yet, according to https://www.coindesk.com/policy/2022/08/24/alleged-tornado-d..., so I don't know what unlawful actions they think he's responsible for.

> issue is that OFAC overstepped the bounds of their statutory authority, which none of your arguments address

Plaintiffs' argument relies on Tornado Cash not being "a person, entity, or organization" [1]. The complaint declares OFAC exceeded its statutory authority, but provides no specifics. (The code cited in ¶ 9 [2] gives courts the authority to tell agencies not to do bad things. That isn't an argument for or against OFAC's specific actions in this case.)

In summary, it's a hope-and-a-prayer complaint. Maybe someone at OFAC fucked up the paperwork, thereby giving rise to some modicum of relief.

[1] https://storage.courtlistener.com/recap/gov.uscourts.txwd.11... ¶ 4

[2] https://www.law.cornell.edu/uscode/text/5/706

What could the developers have done?

> What could the developers have done?

Not sure. Their problem. If the only option was shutting it down, that. It would have looked better, which could have prompted sympathetic legislation. At the very least, it would have likely avoided sanctions.

You can’t just say “they had months to react but didn’t” if you don’t have any idea of what they could have done differently. React how?

Close down until you figured out a way to react. Money laundering is serious crime, helping North Korea is as well. Tornado cash did apparently both, and authorities gave them a heads up. If it was me, I would close my shop down.

It cannot be shut down. The contract is immutable. It's still live, and it will still be live for decades to come, with new duplicates of the contract being published every day.

> It cannot be shut down. The contract is immutable.

If that’s truly the case, shut down as in stop developing it and advise users to stop using it. Then the addresses get sanctioned and nobody is surprised.

You can't reasonably expect a random commenter to have full insight into their legal situation. They should have talked to their lawyers and found options. There is a chance that their financial service is incompatible with the laws in some jurisdictions, and so they might not be able to do business in those jurisdictions. Financial services are heavily regulated...

I think you’re confused about the facts of the situation here. There was no financial service being operated. There was no ongoing business. There was open source code that was thrown over the wall and was locked on the blockchain and immutable.

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