The SDN here just shows the associated addresses, the published contract instance, and tornado cash website, no?
https://home.treasury.gov/policy-issues/financial-sanctions/...
Moving value cross-chain is itself a violation of sanctions. If you start up a new Tornado.cash instance, you're still probably not going to get touched by the rest of the financial network. Risk departments are going to have dig into the details, and legal (if smart) will steer clear. Further, law enforcement will likely root out and make known to Treasury any additional instances of the same infrastructure they uncover, given that inevitably, the usual suspects will be running things through said channels until caught if they don't.
...And you will be hard pressed to find a judge that has the gumption to go so activist from the bench that they go against what Congress has already authorized.
This is what I'm referring to. In the hypothetical that someone tweaks TC to call it something besides Tornado Cash, and runs it with different addresses. It seems to me by the letter of the SDN, from a layman's perspective, it wouldn't violate sanction.
IMO they should have sanctioned any execution of all forks of TC if their desired effect was to stop the service of TC.
The "if the U.S. government publishes smart contracts, I win" --Vitalik Buterin or whoever snark may not be as far fetched once tooling is bettee understood.
Humorously enough, ATF already has more than enough experience at that of enforcement (surveiling new designs and classifying new works as NFA/non-NFA) for it to not be converged upon as a potential model for regulation of such logical constructs.
Throw im some aggravating statutory enhancements for any crimes to which cryptocurrency mixing is found to be a component, and you've got a recipe for at least ensuring normal folk in U.S. jurisdictions tend to stay away from it.
...Good God. I hate this. Please don't make me right on half of these guesses.
Simply starting another with another set of pool addresses will probably not last long. One of the benefits of a public ledger is it's possible to statically analyze transaction traffic in a statistical manner to quickly home in on new sections of the address space. A sanction will come along once the intelligence community or law enforcement has enough actionable intel to say with confidence that that pool address is channeling activity it shouldn't be, then onto the list it goes, locking any value stored therein out of being moved out of those addresses.
Over time, this will create black holes in the address space essentially. More and more quickly as LE/Treasury/Intelligence Community tooling improves.
If you facilitate money laundering, that is still illegal.
If that is your intent, then sure. But merely mixing funds does not meet the criteria for money laundering.
The road crew who builds the interstate knows 100% it will be used for money laundering, yet builds it anyway and does nothing to stop it. (Same for guys at the gas station who sell the gas). Surely knowing money launderers use something isn't enough to be criminally culpable.
>If you run the code in a way that nobody can interact with it.
IANAL and not legal advice, but it looks to me though that a fresh published contract of TC to new addresses doesn't violate this SDN list, even if it interacts with others.
More to the point, crypto mixers are obviously being used to hide the origin of funds. This is money laundering in the colloquial sense. Whether it reaches the level of criminality will obviously depend on a case by case basis. Running a mixer is, IMO, a very very dangerous road to go down.
Tornado Cash runs autonomously on immutable code. Nobody can force the already-running code to start doing AML/KYC.
In my eyes, you either argue that it was not against the law for the devs to publish the code, or you argue that code is not protected by the first amendment. There's not really an in-between.
The hypothetical involved creating “a new TC instance with new addresses and website.” That’s not already-running code. If you do that and then it’s used for money laundering and you do and don’t do all the things Tornado Cash did and didn’t, yes, obviously, we have that precedent.
I'm more interested in discussing the legality of publishing the source code in the first place (is it protected by the first amendment?) and the legal questions surrounding already-instantiated code.
> Ethereum clients run the code automatically alongside all the other code on the Ethereum network, impartial to what it is or does.
That can’t be true on its own. If I write the code in Notepad and share it with friends, the Ethereum client isn’t running it. From what I recall, the way to get it to actually run is to spend gas? Isn’t that the step where it changes from published code to executing code?
I 100% agree that the code behind this all should be free speech. But to try to call “spending money to have a global network execute the code” “publishing” is a pretty big stretch.
In the same way that your ISP isn’t going to get shut down for transmitting the bits that initiated the money laundering transaction, the end node operators are not the proposed target here but rather the people picking up the phone and asking the system to launder money, as well as those responsible for the specific instances of the code that are doing the laundering.
1. A person writes the source code and shares it
2. A person pays a flat amount of ETH to compile/instantiate the source code on the Ethereum network. The code is not "running" yet (aside from its constructor function, if it has one). Now the code is instantiated at an Ethereum address.
3. A person invokes a function of the code, paying ETH proportional to the amount of execution steps taken before the function returns.
4. A swarm of computers acting as block producers, some with identifiable operating persons and some without, produce a block that officially timestamps that function execution into the chain and applies it to the chain's state.
5. A swarm of computers acting as network observers, some with identifiable operating persons and some without, re-execute the transaction locally to verify that the state change was valid.
> the people picking up the phone and asking the system to launder money
Of course, culpability there goes without saying. That's not relevant to the question of whether Tornado Cash is illegal, it's a question of whether crime itself is illegal; in essence a tautology.
> as well as those responsible for the specific instances of the code that are doing the laundering
It looks like you may be talking about the second step of the five I've laid out.
That step, the instantiation of the code, can be done anonymously from anywhere in the world by anyone who can follow the compilation instructions in the readme. If that's the step where legislators try to enforce culpability, it's a lost cause due to the anonymity. Hypothetically, even if law enforcement were able to perfectly determine the legal owner of every Ethereum address and punish them when they illegally instantiate code, they still can't cause the code to be un-instantiated.
Sort by known wallet size. Those efforts should more than pay for the enforcement costs.
This is AML 101. Except with a public ledger. Cash transactions don't afford law enforcement that luxury.
For example, Coinbase CEO Brian Armstrong says that he would wind down Coinbase's staking program before trying to impose a regulation-required fork on the protocol. I suspect that other outfits would follow suit until the only outfits left would be outside the jurisdiction of the regulators.
https://twitter.com/brian_armstrong/status/15600168272535511...
If you do not comply with AML best practices, you'll still eventually be on the hook the first time a ne'er do well facilitates something through ya. Repeat that process till normal folks start catching on, or someone takes Confress by the hand, and you'll find the regulations come quicker than you think.