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Comment by whoami_nr | Hacker News Reader

This is very alarming and a very overreaching thing by the government. These men wrote an open source protocol (smart contract) which was used by random folks to "also" launder money. Its like arresting Tor developers because people host illegal content on it. Leaving this here for more details and reference:

https://rnikhil.com/2022/08/09/tornado-cash-block.html

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This is a false narrative made pretty clear by the indictment: https://www.justice.gov/media/1311391/dl?inline

If you start a company and take investment and rake in money without AML controls then you're going to have a bad time.

Don't want to be arrested? Pretty simple: Either live in Russia or don't start a company to make money off of money laundering. Or just build the open-source software without trying to make money off of it.

What if you could create a smart contract / protocol / service whatever it was. That's not a company. It's just software, anybody can use it for any reason. It could be possible that people use it to launder money, or they could not. But when people use it you get paid. Like a creators skim from every transaction. But you don't really have any control over who uses it or whatnot.

> or don't start a company to make money off of money laundering

Funny because real estate agencies across the western world rake it in without fear.

To the best of my knowledge, most real estate agencies don't deal in cash transactions (as in "bags of"). Money is transferred from bank to bank. The banks have the responsibility to uphold KYC (know your customer) and AML (anti-money laundering) rules. By the time a real-estate agent and vendor get it, the money has already been washed.

Huh? They were running tornado cash which existed for the sole purpose of laundering money. This isn't at all reaching, if your bank down the street started shredding records for deposits in order to transact with drug dealers, they would also be arrested.

But this isn't the same. Going by your example, its like arresting the designer of the shredder machine

Shredders have legitimate uses, this is more like a ghost gun. It's pretty much only used for breaking the law.

Curious, what do you think about breaking the laws of authoritarian countries to save people's lives? Do you think people should be allowed to do that or not?

“Allowed” by whom?

The police employed by authoritarian countries? Yes, though I don’t think corrupt officials should take bribes.

The judges employed by those countries who recognize necessity as an excuse for what is otherwise a crime? Yes, though now the law seems less authoritarian.

INTERPOL? Depends on the law.

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How does this relate to the topic a hand?

"Allowed" by a technology in this case, I guess.

Like should they be allowed (i.e., have a possibility) to financially support opposition, journalists, etc.? Should the persecuted minorities (LGBT, etc) be able to hide their actions that may reveal them? Or should they be able to leave the country without revealing such plans to authorities in advance? And so on.

It's relevant because a privacy in finance (i.e., "breaking the laws") is important for those people. So I'm curious what the KidComputer thinks about this.

I think you're both ignoring one key factor here: intent.

If this was simple service for moving/spending money privately. Sure, probably nothing wrong then. But the indictment specifically states that they knew the service was being using by sanctioned entities and didn't try to prevent it. That's makes a big difference.

They knew that because it's a public information and they didn't prevent it because it's already deployed smart contract. They have no ability to prevent a specific party from using it, it's already deployed to the network and note that it's still impossible to change it even now.

As an example, since now it's under US agencies control and they know that sanctioned entities are using it, why they still don't try to prevent it? Are they supporting NK?

Fair enough. But the indictment reads as if they were knowingly profiting off of illegal transactions and we may be looking at the case where that line in the sand is drawn.

As a counter example, should the US government not try to stop the cartels from using Swiss banks for money laundering because some arbitrary contract was already in effect?

In other words: Monero might be getting some friends on the Fed's crypto blacklist over this case.

"contract" is a wrong term, that's what I always arguing, because it has nothing to do with the legal meaning of the term. Here it's a public (i.e., "deployed") code. It just exists.

Regarding "profiting", it is a good question, and that's what I don't understand in this case. To my understanding there is no direct fees in Tornado Cash. But there are Relays, which, to my understanding, allow to withdraw to a fresh address and take a small fee for that. Anyone can run a Relay, and the use is optional. I think those guys were running one of them too.

A Relay doesn't know who is who and cannot limit withdrawals of money deposited by a sanctioned entity. But as they were told that some of transactions are likely illicit, even though they don't know which particular, they knowingly profiting off it in general. That's very broad and later can be applied to anyone.

Similar can be applied to mining. In general ETH, miners do know the addresses and they do not accept transactions that include sanctioned addresses. So they are fine. But for Monero example, it's the same problem. Even though they don't know the transactions participants, they may make profits off illegal transactions.

Ignoring that I think you're grossly understating their involvement, if you want to focus on only their development efforts, this is FAR closer to the people that made diesel tuners to facilitate removing emissions equipment.

There's no legitimate reason for those to exist. Or this.

Do you mean there is no legitimate reason to have a financial privacy? like in general it should not exist, or just this particular example?

>if your bank... also be arrested

No they wouldn't, how naive are you? they'd get fined a small fraction of the amounts they likely earned for the crime. [1,2,3] + 10 others from one bing search.

[1]https://www.theguardian.com/world/2012/jul/21/drug-cartels-b...

[2]https://www.theguardian.com/world/2011/apr/03/us-bank-mexico...

[3]https://money.cnn.com/2018/02/08/news/rabobank-mexico-drug-m...

Different laws come into play when your platform targets monetary transactions as opposed to general purpose data transactions. Tor operates in an entirely different legal landscape.

Yeah well, let's just say a big country doesn't want another big country to be able to get away from sanctions. If you catch my drift

Doesn’t your use of scare quotes around “also” imply that they were, in fact, laundering money?

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