Tornado Cash verdict has chilling implications for industry | Hacker News Reader

Tornado Cash verdict has chilling implications for industry

cointelegraph.com

61 pointsandrewfromx85 comments

Except they weren't convicted of writing the Tornado Cash protocol. These guys operated a website to create the contracts, accounting for 90% of the contracts issued. Their chats have clear statements of them discussing billions of dollars worth of illegal money from North Korea, various crypto hacks, etc using the service; but they refused to implement any KYC controls for the website. The few controls they did put in place, they (again in chats) made sure they were inadequate to stop any stolen coins from using the service.

That's bad enough... but they went one step further by creating a coin so they got paid for each Tornado Cash contract. They pulled in millions of dollars for themselves while operating a service that they knowingly facilitated illegal activity.

If it wasn't for the website and the millions in earnings, they would have been ok. Tornado Cash -- the smart contract -- is still operating today. Only the website is gone.

It would be nice if articles would cite a source other than twitter commentary. The official verdict makes it clear this was about operating a laundering service not publishing a laundering tool.

> The relayer acts as an intermediary and arranges the full withdrawal, including the payment of the fee. … the transaction track of the cryptocurrency in question stops at Tornado Cash. …

> When these acts are carried out in respect of crime-derived Ether, it is in fact Tornado Cash that carries out the concealing or concealing money laundering act. Therefore, in the opinion of the court, Tornado Cash cannot be seen merely as a tool for the user.

https://uitspraken.rechtspraak.nl/details?id=ECLI:NL:RBOBR:2...

IMHO that kind of projects should simply go anonymous.

You can’t really take on governments and then complain that they are fighting you back.

It’s pretty clear that the gvts are following the money trail to take down people and organization they consider a security risk. The whole financial system and sanction system are built upon this, that’s why there’s KYC everywhere.

I don’t think that it’s reasonable to expect to get away with building a machine that takes away this tool from the regulators and law enforcement. They will obviously hold you accountable for the instances that your code makes their system useless. In the case of Tornado Cash, you can't even claim that this is an unintended consequence.

Therefore I don’t believe that there are any implications about writing open source code at all.

Just don’t mess with the systems that run the society and take credit for it and not have the means to stay beyond the reach of those you are messing with - all at the same time. That’s hardly a new concept. Revolutionaries are never “the good guy” until the revolution succeeds.

It is unbelievably hard to "go anonymous" when the entity trying to de-anonymize you is a nation state.

Being revolutionary is hard, its not an entitlement. It's not unusual in this endeavour to die in a ditch or your head paraded on tip of a spear. You are literally the enemy of the state, a terrorist, an illegal when you take on a state. You are not even "the hero of the people", at best you are the hero of a group of the people who share your deals and everyone else sees you as undesirable, especially the people who are the beneficiaries of the system you are trying to take down and they don't even have to be bad people.

Also, just because you take on a powerful organisation doesn't even make you the righteous one. Awful lot of people depend on these organisations for stuff like following the money to catch other "revolutionaries" who blown up their metro stations for example. It's very likely to be vilified when you decapacitate the governments.

I'll grant revolutionaries are not always the good guys, but you seem to be taking for granted that an "enemy of the state" never is.

We're talking about people who wrote software, not bombers.

I don't judge the enemy of the state, merely point out your status when you take on a state.

Also, "they just wrote some code" isn't a defense. Some of the greatest criminals just pushed some buttons. Adding extra steps or using a device to do what you do doesn't change the nature of your actions. The people who you are trying to take down and label as oppressor just happen to write stuff on paper or on a computer too.

If you think that all the monetary transactions should be unstoppable and anonymous(which I actually agree with, IMHO the state should be taking on criminals through proper police action and not meddle with other systems or force companies act like police to make its job easier) and you make a device that helps people do that and if the state disagrees with you you become a criminal.

If I ever build a money laundering device, I wouldn't be claiming responsibility for it or say it can't be illegal because "its just some code".

How the heck did satoshi nakamoto do it then? It amazes me we still don't have a definite answer on who he is/was.

Probably? Create a thing, launch it, die shortly thereafter without touching it much further.

But in any case, I didn't say it was impossible. I said it's unbelievably hard, and I stand by that.

Yes. I specifically avoid any projects adjacent to things which would work “against” the interests of any powerful government that I might be subject to.

I don’t believe that I can hide. I think if I was in Russia or China and wanted to take on some of these interesting projects I might consider some of them if I didn’t super love traveling.

But the only way to do work in those types of interesting spaces is to be very clearly aligned with your government and ideally positioning yourself towards partnering with your government.

I don’t think heroes are stupid as long as they understand the likely consequences and are willing to be “martyred”. But many of the people working in these spaces are merely greedy with delusions of grandeur or invincibility, or naive … not heroic. A select few have qualified as heroes e.g. TrueCrypt or Aaron Swartz or LavaBit. Though Swartz I also believe was naive, but he faced consequences that simply didn’t make sense, so I don’t entirely blame him for believing whatever consequences he would face might be more endurable than what he was threatened with - I make the assumption that he was resolved to face reasonable consequences.

Snowden would have counted as a hero to me if he only released documents relating to illegal domestic surveillance and not released operational details of legal international spouting. He was more resolved to deal with the consequences than any other character I can think of.

The comparisons brought up in the article (cars, baseball bats, even Ethereum) service legitimate purposes, in addition to their potential for crimes.

What's the legitimate purpose for Tornado Cash?

I swear this reminds me of the 1990s in the United States, known as the "Crypto Wars". Many argued that the primary users of strong encryption would be criminals, terrorists, and other malicious actors, implying that law-abiding citizens had no need for such privacy. I've used tornado cash even for small amounts because I'm privacy conscious.

For me "What's the legitimate purpose for Tornado Cash?" sounds like the 1990s "What's the legitimate purpose for encryption?"

Even today, most people don't go out of their way to encrypt their emails. They don't want to go through the additional effort. Similarly, people rarely pay for things in cash, despite the privacy risk of having a transaction record.

There will always exist people who will go out of their way to be privacy conscious, but the vast majority will simply trust in the basic security mechanisms.

The legitimate purposes exist. But unless they're effectively zero effort and zero cost, people won't use them. It'll always be just a few privacy advocates and a whole buncha criminals.

>The legitimate purposes exist. But unless they're effectively zero effort and zero cost, people won't use them. It'll always be just a few privacy advocates and a whole buncha criminals.

But this sentiment of yours is weaponized by the state to oppose a reality where everybody can enjoy better privacy with zero effort and zero cost, so the ruling class can have more power over the peasants. I don't want to live in a panopticon where an all-powerful state has absolute control over our lives and persists every single of our actions, transactions and thoughts in a database.

It hides the total value of your assets from a merchant.

Imagine the privacy implication if every time you swiped your credit card, the merchant could see your entire net worth. It'd be a disaster.

These blockchains are public ledgers. If people don't make any attempt to obfuscate their transactions by hiding them among transactions of the same size, anyone who wants to can see their entire balance without much effort.

It's entirely legitimate not to want to broadcast your entire holdings every time you transact.

That's a bit of a stretch. You don't need to use a wallet with all your funds (I really hope people aren't doing it). When you transfer something to another wallet you can make some guesses, but it's not clear if someone paid your that money or you transferred it yourself. Any move through a centralised exchange will also effectively erase the trace for that purpose.

I mean, you can use it for that purpose, but there are ways to do it in not completely dodgy and KYC-evading ways.

Sure, users with some understanding of the tech can get a weak form of privacy (or at least plausible deniability) if they're careful about shuffling funds around different wallets.

Why should that be the limit? Are you against stronger forms of privacy? Sounds a bit like laws prohibiting the export of encryption software with >40 bits of security.

It does avoid KYC, but so does handing someone cash, and we haven't made that illegal yet.

> It does avoid KYC, but so does handing someone cash, and we haven't made that illegal yet.

Using cash doesn't get you out of the KYC requirements. It's not a law about specific tech, but what you use the funds for.

Using cash generally means there's no need to involve a financial institution that KYC regulations would apply to.

Moving it from one wallet to another does virtually nothing if someone cares to look. And the exchange thing doesn't help much, because all you've done is change which third party knows more about you than they need, the merchant or the exchange.

All anyone needs to know about you when you're the buyer in an ordinary transaction is that you have the funds to make the purchase. The rest should be yours to disclose if and only if you want to.

I think you're invoking a liberarian argument where nobody is entitled to the fruits of your labor except for you. That means it's none of government's business to know how much money you have or who you transact with. Tornado Cash made this sort of ideal possible on Bitcoin.

>a liberarian argument where nobody is entitled to the fruits of your labor except for you

There simply is no fruit which is the product of one's labor, whether it be one person or one enterprise. Any honest analysis must start here.

I don't know what you mean.

We live in a society. All our knowledge and labor is dependent on prior knowledge and labor of our neighbors and those who came before us, also known as our society.

Clearly falsifiable.

If I harvest a random apple growing wild, that my labor alone.

But I know where you’re going with that argument - everyone’s work is built upon someone else’s so…the government is entitled to all of it.

Who planted that apple tree?

Who owns the land it grows on? If you own it, how did you buy it?

Who brought apple seeds to the continent where you plucked it?

Who raised you to the point that you were able to pluck that apple?

Who built the roads that you drove on to get close to the apple tree? The car you drove?

Who ensures that the air and water are clean enough for apple trees to grow there?

The problem with any manufactured scenario such as this is that it narrows the focus down to a single act, and tries to claim that that is the entire system.

It never is. The system has no beginning or end, and must be considered far beyond a single act if you are to meaningfully understand what supports it and just how interdependent it is or isn't.

LOL.

You can't picture a scenario where early man plucks a wild apple? Or that tree naturally replicate themselves?

The fact you ask about how they drove there made me chuckle.

You said "If *I* harvest a wild apple".

You are, presumably, not an "early man", and whether or not you own a car, you certainly have access to the technology.

While it is definitely an assumption, I'm guessing you are American. If so, then any apples you would be able to pluck would have been brought there by deliberate human seeding at some point in the past.

Also, like with a great many food crops, if an early man were to pluck a truly wild apple, it would be rather different than what we would buy at an orchard today. Human cultivation over many millennia has massively changed most of the plants we eat—whether that be the leaves, the fruits, the seeds, or the roots.

Your notion of a perfect state of pure wildness supporting humans who have never had any support from any other human is nothing but a fantasy.

> Your notion of a perfect state of pure wildness supporting humans who have never had any support from any other human is nothing but a fantasy.

You really struggle with hypotheticals don't you?

Either that or you're dancing around in order to avoid admitting that someone could produce something purely out of their own labor.

It's clearly a false statement and you could use a number of other example - creating something basic out of wood, growing a wild edible food, using naturally occuring pigments to create art.

In a completely hypothetical situation, where a human came into being fully formed with complete knowledge of how to do a thing and all the resources to do it spawned out of the void around them, then yes, they could produce something purely out of their own labor.

In any real situation, the very existence of that human at any age past infancy is the product of society. Even back to the first proto-hominids. So is the knowledge to be able to produce the thing.

In any modern situation, the resources and tools that human has at their disposal are also products of society (yes, even "natural" products like wood—at least in America, there are nearly no old-growth forests left, and literally every natural resource has to either be cultivated or protected in some way, or extracted with nontrivial tools).

Again: you are only able to come to your libertarian-fantasy conclusion by narrowing your focus to the single act, rather than being willing to acknowledge all the supports that make it possible.

>If I harvest a random apple growing wild, that my labor alone.

Nonsense. It takes a village to raise a child, and the agricultural knowledge to harvest anything stands on the shoulders of approximately all of human history.

An apple growing wild on a tree? Please share the "agricultural knowledge" require to pluck a ripe, wild apple?

No. Man can harvest nature with his own labor and profit from it. Alone, with only his own work.

I know that fact burns a certain side of the political spectrum, but it's the truth.

Under capitalism, this is called theft.

probably meant to say "libertarian" .. and to put a finer point on it, the government with jurisdiction over trade does indeed get to know how much money is traded with, and with whom.. on the reporting decided on by regulation.. not a wholesale dragnet monitoring of every transaction and every account balance. Meanwhile, modern finance is such that financial products are unequal, especially over borders, so the right to trade money and the like over time is included in legal definitions of private property. .. something like that.. ?

Ctrl-F baseball doesn't show any results for me. Has the original article been updated?

In any case, to the extent that you're pointing out that it's another tricky case of how to distribute responsibility for bad stuff, I agree. Other examples range from electricity (clearly has good uses, bad results are mostly by accident), through littering (how much is Coca Cola's fault, how much is the end user's) to guns (only have "bad" uses -- but you probably still want your own country's military to have them).

I don't know of any way to allocate responsibility in these cases that doesn't ultimately amount to pure subjective opinion. Does anyone know of a more objective approach?

> Ctrl-F baseball doesn't show any results for me.

It's an example in one of the quoted tweets, which is of course an image and not text despite being purely textual content.

Kind of OT but this is one of the new killer features in MacOS: I was able to Ctrl-F (or CMD-F I guess) ‘baseball’ and it found the text in the image. I can also copy the image text and paste plain text. So much text is now images of text nowadays that it’s almost necessary to have this ability.

Thanks, that helped me find it. And I see they already gave my gun example.

Thinking about it some more, this question is closely related to the concept of negligence.

> to guns (only have “bad” uses …

I’m not sure what you are saying exactly but guns do have legitimate uses that aren’t bad. As soon as you don’t live in high population density, those uses become apparent. I’ve also met people who live on very little means and hunt to provide for their family.

> to guns (only have "bad" uses -- but you probably still want your own country's military to have them).

the greatest benefit from guns is their deterrent qualities, which are very difficult to quantify. We never hear of the thefts or violence or other horrors that don't happen because potential perpetrators cannot manage the risk that their victims may fight back.

I'm confused. How does a home invader know if I am armed?

How is gun ownership supposed to prevent theft or violence? It seems like it instead paves the road to escalating to violence in less-severe scenarios.

I suspect it is very difficult to qualify because there are no such qualities in practice.

>How does a home invader know if I am armed?

They don't. As with many things in life, they have to estimate that risk. A would-be home invader correctly estimates this particular risk to be higher in jurisdictions where guns are legally permitted -- and especially in areas where keeping a gun in the house is known to be common.

Does that would-be home invader themselves own a gun that they are prepared to use, which would tend to neutralise this risk? Possibly. I don't know how that probability varies with legality of gun ownership, but I would expect that in both cases (gun ownership legal, gun ownership illegal), more home invaders than home owners have access to guns. If that's true, then more home owners with guns fired act as a deterrent.

>It seems like it instead paves the road to escalating to violence in less-severe scenarios.

Yes, it probably also (not "instead") does this. There's no dichotomy here.

At the end of the day, the reasons for and against legalising gun ownership are similar to the reasons for and against arming your military. Doing either one raises the stakes -- the hope (assumption) being that the other party will then find the stakes too high to engage, even if they themselves are similarly armed.

>I'm confused. How does a home invader know if I am armed?

They don't, but they if you're _not_ if you live in a gun-hostile nation. And knowing you might be is a deterrence, for the same reason knowing you might get caught by the police is.

>How is gun ownership supposed to prevent theft or violence?

Well, because of the risk of being killed if you try to commit a crime against someone with a gun. The cause-effect there is pretty clear.

It does when it's common. In northern New England, for example, like Maine and New Hampshire, I'd estimate 1 in every 3 or 4 people in most public spaces are armed. I'd be shocked to find out it's less than 1 in 10 in any specific gathering of 100 or more people.

Do you start shooting when the odds are that high that someone might shoot back? Maaaaybe, but not as soon as you might if you were surer that you would get away with it.

>In northern New England, for example, like Maine and New Hampshire, I'd estimate 1 in every 3 or 4 people in most public spaces are armed. I'd be shocked to find out it's less than 1 in 10 in any specific gathering of 100 or more people.

I've lived in Maine my entire life—from the most rural parts to Portland—and this is just nonsense. There is absolutely no way that even 10% of people are armed in public.

>Do you start shooting when the odds are that high that someone might shoot back? Maaaaybe, but not as soon as you might if you were surer that you would get away with it.

Perhaps you'd like to consider what JUST happened in Lewiston last October.

Very few of them are carrying openly (why make yourself the first target?), but I stand by my statement that I'd be shocked. A youth league bowling tournament would be an exception, given the preponderance of children.

There was a combined six minutes between shots fired at the two locations and officer response, four at the youth league event, and only two minutes at the bar.

I didn't say nobody's ever going to try it. Some people are going to break, and show up with a lot of firepower and a plan. All I said was people will try it later than they might if they were sure most of their victim pool wouldn't shoot back.

>Very few of them are carrying openly (why make yourself the first target?), but I stand by my statement that I'd be shocked.

This is an extraordinary claim that demands at least some evidence in order to be taken seriously.

>A youth league bowling tournament would be an exception, given the preponderance of children.

To the contrary: if you honestly believe that somewhere between 10% and 25-33% of Maine adults are carrying for protection—and, once again, there is literally no way that this is even close to true—it would make even more sense that the adults there would have been carrying To Keep Our Children Safe(TM).

Attackers would have the advantage even if the victim was armed. It's not like they are going to be sitting on the couch with the loaded gun pointing at the front door all day.

And shooting somebody if they have a gun, just in case they shoot first, seems to be considered normal in some circles in the US: https://www.bbc.com/news/world-us-canada-69013312, so carrying a gun seems like a big risk.

We don’t have anecdotes, but we do have statistics

The thread on warp drives got killed so I'm replying here (sorry for out of context folks)

"Would it explode or just punch a hole" depends on the energies of the impact involved. If there is only enough energy to break chemical bonds, it would punch a hole.

As energy of the impact gets higher the hole gets deeper. Probably punching all the way through the ship.

Once the impact energy gets strong enough to break nuclear bonds, the story changes. Now we have an e=mc^2 event at the impact site. It isn't just the impact energy anymore. At minimum, the punched hole just got wider and potentially radioactive as byproducts go on adventures. Once the hole is wider than the ship, I think that counts as "exploded".

https://en.wikipedia.org/wiki/Tornado_Cash

The first paragraph of the Wikipedia page says Ethereum networks are public by default. This gives you more privacy. People may value privacy because they don't want others to know they have money and target them (kidnappers, surprise sixth cousins, etc.).

There's more to the story than what's in this article. US Treasury says they had specific anti-money laundering rules they were supposed to comply with but "repeatedly failed to", and I've also seen allegations of them directly providing instructions for how to launder money using their own service.

While it I did just Google translate the judgement [1]; I didn't see anything about the US in it.

It's pretty straightforward, a bunch of money was laundered using Tornado Cash, this guy contributed code to Tornado Cash, therefore he should be subject to money laundering penalties. (Translated Dutch, "As a result of the Kidwelly investigation, the suspect is accused of complicity in habitual money laundering.")

[1]: https://uitspraken.rechtspraak.nl/details?id=ECLI:NL:RBOBR:2...

This is quote from the Dutch court:

"Tornado Cash is not a legitimate tool that has unintentionally been abused by criminals," it said. "The defendant and his co-perpetrators developed the tool in such a manner that it automatically performs the concealment acts that are needed for money laundering."

I still think there is more info we don't have, and/or maybe they are interpreting the design of the app to be explicitly for laundering, which is probably where the intent/conspiracy ruling(s) come from.

That quote also doesn't implicit the US. My point is that it's irrelevant both if the US Treasury told him anything or if he ignored what they said. He's convicted by a Dutch court for violating Dutch (EU?) crimes. The US is a non-sequitor.

Privacy.

Do you need a legitimate purpose for privacy?

Privacy.

Safety (from government).

true, which it fails at anyway against a sufficiently determined actor . The FBI and other agencies seem to have no problem finding the original source of funds

jinx

“i’m sorry that your warrantless surveillance regime was built on the assumption that people would always need intermediaries to transact”

https://x.com/NeerajKA/status/1346836020927619077

I'm sorry that your workaround was built on the assumption that the US doesn't care about unregulated assets.

Because like damn, that is one hell of a risky bet to hedge your savings on.

It's more like a bet that the US will be powerless to regulate it, which is holding true for XMR.

LocalMonero just shot down. And it was a p2p XMR marketplace. Right now there's no sensible way to trade XMR to FIAT easily without your government knowing.

If the US really squeezes those cryptos they will die promptly.

XMR -> other crypto -> fiat. Send your Monero around a few wallets and the government will know you have Monero but not the origin. There are probably alternatives to LocalMonero WIP

Sadly I think they will if it ever becomes popular enough.

"We're sorry you though we'd allow any status quo that usurps our ability to enforce our authority."

This is a welcome development. Next, I suggest to prosecute these individuals, named in the Bitcoin Core source code, for their involvement in the crimes perpetrated through Bitcoin.

        vSeeds.emplace_back("seed.bitcoin.sipa.be."); // Pieter Wuille, only supports x1, x5, x9, and xd
        vSeeds.emplace_back("dnsseed.bluematt.me."); // Matt Corallo, only supports x9
        vSeeds.emplace_back("dnsseed.bitcoin.dashjr.org."); // Luke Dashjr
        vSeeds.emplace_back("seed.bitcoinstats.com."); // Christian Decker, supports x1 - xf
        vSeeds.emplace_back("seed.bitcoin.jonasschnelli.ch."); // Jonas Schnelli, only supports x1, x5, x9, and xd
        vSeeds.emplace_back("seed.btc.petertodd.org."); // Peter Todd, only supports x1, x5, x9, and xd
        vSeeds.emplace_back("seed.bitcoin.sprovoost.nl."); // Sjors Provoost
        vSeeds.emplace_back("dnsseed.emzy.de."); // Stephan Oeste
        vSeeds.emplace_back("seed.bitcoin.wiz.biz."); // Jason Maurice

Is there anything in judgement that limits this to cryptocurrency?

I could see this precedent being used to shut down open source projects in end-to-end encryption, BitTorrent, etc.

While I have no knowledge of Tornado Cash itself, I hope an organization like the EFF would help appeal this to mitigate the larger danger. I believe there are precedents that publishing source code is protected under the first amendment (code is writing).

This is distinct from operating a service.

This, by the way, is another thing I dislike about crypto. The obvious need to regulate it could jeopardise the fragile consensus we currently have on private e2ee communication being allowed.

In other words, the reckless behaviour of today's crypto operators could lead to a fresh round of the 1990's crypto wars (when "crypto" meant cryptography), but with a different (worse) outcome.

I’m just glad this isn’t a US court ruling. USA has a strange habit of enforcing its laws overseas - see the Kim Dotcom debacle where US laws were used to prosecute someone who was not a US citizen and never set foot in the USA.

There is hoping this verdict will be challenged and overturned. If they start applying the same liability standards to other type of software I could see many cybersecurity professionals catching heat.

Does this ruling actually set enough legal precedent for someone to, for example, successfully press charges against Smith & Wesson for assisting a murder facilitated by a weapon they manufactured and distributed? Or are the legal implications of this ruling a bit more limited/complicated than that?

From what I understand, they weren't being charged for created a "dangerous" technology but for actively running a money laundering operation that happened to use that technology. Some of the chat logs that were obtained seem particularly damning.

So it's less like S&W legally selling guns that are later used in crimes and more like a low-level buyer in the Iron Pipeline (https://en.wikipedia.org/wiki/Iron_Pipeline).

I'm not sure about Smith & Wesson specifically, but this seems similar:

https://www.abc.net.au/news/2021-07-29/gun-maker-offers-33m-...

I'd guess it comes down to whether a somebody can claim that the intended uses of their product are legal, and that they aren't encouraging illegal uses in any way.

Another interesting stretch would be holding governments responsible for knowingly allowing illegal activity with their own currency; Especially if that currency is used outside of their borders.

I don't have a lot of sympathy here because the cryptocurrency industry is basically a financial industry that's trying to evade financial regulation. Acting all pikachu-shocked face that the government doesn't believe your arguments as to why you can evade what is perhaps historically the most closely-regulated industry speaks of naïvety.

One of my other interests is decompilation, which is another field where there is a lot of wink-wink-nudge-nudge-this-totally-isn't-for-illegal-purposes activity. So I should probably have more sympathy here... but the reverse engineering field is protected in part by the Betamax substantial-noninfringing-uses precedent, which is harder to apply to cryptocurrency tumblers.

In a related US case, the US indictment alleges that "The defendants and their co-conspirators created the core features of the Tornado Cash service, paid for critical infrastructure to operate the Tornado Cash service, promoted the Tornado Cash service, and made millions of dollars in profits from operating the Tornado Cash service."[1] More analysis of the US case.

[1] https://www.justice.gov/usao-sdny/pr/tornado-cash-founders-c...

[2] https://www.skadden.com/-/media/files/publications/2023/09/c...

TL;DR: the Tornado Cash developer, Alexey Pertsev, was convicted by the Dutch authorities to +5 years in prison for money laundering for developing Tornado Cash (not for actually laundering any money).

I wonder: will they go for the monero devs next? What about the creators of wallets that don’t require KYC before creating an address?

As far as the US is concerned, TC is legal. It is illegal if used to facilitate a fraud or launder its proceeds.

Well, for starters, the tornado cash contract is on the US OFAC sanction list...

Link: https://sanctionssearch.ofac.treas.gov/Details.aspx?id=39796

What is the actual legal interpretation of OFAC listing a website domain and a set of Ethereum addresses on the OFAC sanction list? Does this simply mean that it is illegal to transact with foreign entities associated with these identifiers? Or does it mean something more? Or nothing at all?

Anything on that list is disallowed as an actor in any transaction save for making a deposit in a regulated institution (thereby freezing the asset).

Osama bin Laden may put money into the U.S. financial system, but it may not move any further after that point.

I don't think this is right. From the Wikipedia page:

> In August 2022, the U.S. Department of the Treasury blacklisted the service, making it illegal for US citizens, residents and companies to use.

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