It seems strange to me that there is a consensus on this site that communications privacy is a human right but that financial privacy is a terrible evil. In fact all of the arguments pro/con (terrorists, drug dealers, etc can benefit from it) are basically identical yet there exists this double standard. The truth is that these now-sacred laws that ended financial privacy really only started being enforced in America in the 80s and their European equivalents in the late 90s. Are we really any safer now than we were then? The proponents of these laws always claim that if only they could close the loopholes they would be successful. First it was bearer shares, then it was "shell banks", then it was money orders, now it's gift cards, luxury real estate, and cryptocurrency. I am skeptical that closing all these supposed loopholes will actually move the needle on crime. As long as you can 10x your money bringing cocaine from Colombia to America or robocalling grandmas, people are going to do it and new reporting requirements or whatever may make them pay 25% for laundering instead of 10% but it won't put them out of business.
The US sanctioning Tornado Cash and the resulting repercussions is deeply concerning. Whether or not you like crypto, you should not be supporting this if you are a researcher, academic, technologist, cryptographer, or privacy advocate. The code for Tornado Cash is a series of cryptographic and mathematical functions that can be repurposed for a variety of applications unrelated to privatizing user wallets. The protocol itself is designed for one reason: to give users privacy through end to end and zero knowledge cryptography.<p>Allowing it to remain open source and accessible as a tool for blockchain privacy and codebase for cryptographic research is a net benefit for the entire world.<p>A comparison would be that US decides to sanction the open Matrix protocol along with any user, developer, source host, or sponsor that has ever contributed to it in the past - because it can facilitate end-to-end encrypted terrorist communication.
> This also might be the first time where a piece of code got sanctioned.<p>It's not, though. The project got sanctioned and by extension the services it provides. The blockchain implementation of said service is rather unique, but I don't think this is technically any different from projects like Popcorn time being sued/shut down despite their p2p systems.<p>The difficulty with smart contracts is that it's hard to take those services down. After all, you can't take a smart contract out of ethereum. The legal ramifications of this are interesting: the undeletable nature of blockchains and their capacity to store arbitrary data or execute arbitrary code could taint the entire blockchain when bad actors unleash services that cannot possible be taken down, causing anyone participating in the blockchain system to be an accomplice. Or perhaps the governments of the world will look at this more pragmatically and simply consider the contract dead, only sanctioning new people who call upon the contract to execute transactions.<p>This indestructibility of the blockchain is often sold as a benefit, a way to stick it to the government, but the real world doesn't care about your technical implementations when the police tells you to shut it down. Designing a system that you cannot control or shut down may not be a great idea, especially if interactions with said system are logged permanently and publicly.
Cash is a necessary mechanism in the economy.<p>The good thing is that it's become a "hobby" mechanism. Imagine the scenario where you come into £1m in cash by "finding" it. What are you going to do with it? You can't buy a house, you can't put it in the bank, you can't invest it in stock or a pension. You could subsidize your lifestyle a bit - but not vastly due to the risk of someone noticing.<p>The best idea that I can come up with is to start a cash business and launder the money through that; for example a burger van or something... Probably you could build that to about 100k a year and get away with it, just, maybe. Quite a lot of work and inconvenience to do it. Of course you could try and get it laundered in a criminal conspiracy (a-la breaking bad) but you will just get robbed. Maybe used cars would work as well.<p>Maybe you could drive round and buy up some nice wine or something like that that keeps for a long time... I think you can pay cash for a couple of hundred without attracting too much attention.<p>You are on the clock as well - every 5 years or so the notes change and stop being accepted.<p>The point is that cash works well for the low end informal economy, builders and plumbers and window cleaners can make their businesses work with it. It doesn't work so well for oligarchs. Crypto does. That's just one reason it's so bad and I don't mourn for this.<p>The state will not give up it's monopoly on money or violence. Anyone who challenges either of these will find the other deployed against them.
For those who think this is a good thing: can you explain why people should have access to HTTPS and Tor (web privacy), PGP and Signal (communication privacy), but not Tornado Cash (financial privacy)?
> What happens to the FOSS developers who contributed to the project? Are they sanctioned as well?<p>devs were mostly anonymous, IIRC. Coindesk says “Tornado Cash developer Roman Semenov's GitHub was suspended.” [1]<p>> What will happen to the tainted money? This figure is about 400M$. I expect a secondary market for TCtETH (Tornado cash tainted ETH)<p>indeed. the feds haven’t seized any money. the 10,000s of TC users still have anonymized possession of decent sums of money and have effectively been told “you can’t legally use this for goods and services”. have the feds just created a bunch of $1000 coupons for DNMs?<p>> What happens to the protocols/pools/(d)apps which interacted with it?<p>contract still live, i assume. i think it was governed by a DAO so if they haven’t/don’t hurry up and lock that down there’s risk of a malicious takeover as the TORN token devalues. if you blacklisted everything that these tokens interact with you'd blacklist like 10% of crypto. AMMs and bridges are in some sense just a much more diffuse tumbling service. i guess it works for now because most people running Ren nodes (for example) don't understand that they're helping people launder, whereas the TC service is much more in-your-face.<p>Tornado Cash published their UI a month ago. their GitHub’s been taken down but i expect mirrors will surface. it should be totally possible to keep using the service — expect significantly decreased liquidity — and the fun part (for me) will be to sit and watch to what degree the decreased normie use of TC kills the thing v.s. just slows it down.<p>the GitHub ban is a warning to me though. i’m in (non-crypto) circles where we largely host our own repos, but few of us publicly mirror the software we build upon. makes me think i should start doing so in advance.<p>[1]: <a href="https://www.coindesk.com/policy/2022/08/08/crypto-mixing-service-tornado-cash-blacklisted-by-us-treasury/" rel="nofollow">https://www.coindesk.com/policy/2022/08/08/crypto-mixing-ser...</a>
Vitalik came out as a TC user earlier: <a href="https://twitter.com/VitalikButerin/status/1556925602233569280" rel="nofollow">https://twitter.com/VitalikButerin/status/155692560223356928...</a><p>He apparently used it to donate to Ukraine.
There are a ton of legitimate, non-criminal reasons to use Tornado Cash. Maybe it just feels weird for random strangers on the internet to be able to figure out your net worth when that's not something you share with my family and closest friends.<p>The real thing at stake here is freedom of speech. Following this OFAC announcement the code was immediately censored from Github. This is because OFAC violations can land you in jail for up to 30 years. This means that code, which is clearly just speech, is being censored. Either first amendment, free speech rights will be eroded or governments will have to relinquish their control when it comes to who deciding how you can spend your money. Governments clearly aren't going to give up their control without a fight.<p>Sometimes there's a political and ideological aspect to our work as software engineers. I'm reminded of brave heroes like Martin Hellman and Phil Zimmermann who risked going to prison over our right to access cryptography. The internet as we know it today only exists because they were willing to break the law at immense personal risk.<p>We need people with that kind of courage more than ever today.
> I really hope that the political authorities dig deeper and technically understand services like Tornado cash and come to a realisation that criminal behaviour exists everywhere and cannot be blanket banned by shutting down legitimate services. You can’t just end up banning hard cash just because its used by criminals and for money laundering. (They tried this in India but it didn’t go as expected).<p>I think sadly, Israel just did ban hard cash for large transaction. See <a href="https://news.ycombinator.com/item?id=32281151" rel="nofollow">https://news.ycombinator.com/item?id=32281151</a>
First we had "drugs", then we had "terrorists", then we had "pedophiles", and now we have "money laundering". All of these things really do exist and really are bad, but their negative impact on society is strategically overstated and the measures taken against them are mostly ineffective against the thing they are purported to combat, yet cause significant amounts of "collateral" damage to the privacy and freedom of all of us.
So the article says the blockchain is, by design as a public ledger, a privacy nightmare.<p>And we have to use it (for some unstated reason).<p>So the only solution must be to enable money laundering so people can get their privacy back.<p>My take: that seems kind of backwards. How about we just don’t use the thing that purposely exposes everyone data? If people want privacy then that seems like a design flaw.<p>Enabling (maybe limited) money laundering is not a good solution. It’s a very odd band-aid on the real problem.<p>This is a false dilemma. We have more choices than “enable money laundering” and “no one has privacy”.
Let's say you're a business that accepts crypto and what if someone sends you ETH or some coins like USDC. Is it your job to check that these coins didn't come from Tornado? It's quite hard to do that. What if account A got their ETH from Tornado, then sent it to account B, which then exchanged the ETH to USDC on Uniswap, which then sent the USDC to account C, which then sent the USDC to you.<p>This is a problem for Bitcoin as well. What if someone got ETH from Tornado. Then converted the ETH to renBTC (<a href="https://renproject.io/" rel="nofollow">https://renproject.io/</a>) on Uniswap. Then converted the renBTC to BTC. Are those Bitcoins now somehow tainted?<p>This new law makes crypto essentially unusable (at least for US persons).
> What will happen to the tainted money? This figure is about 400M$. I expect a secondary market for TCtETH (Tornado cash tainted ETH)<p>1) The sanctions only apply to U.S. persons.<p>2) My understanding is that it's fine to accept "tainted" ETH as long as it doesn't directly come from one of the Tornado Cash contract addresses[0].<p>[0] <a href="https://home.treasury.gov/policy-issues/financial-sanctions/recent-actions/20220808" rel="nofollow">https://home.treasury.gov/policy-issues/financial-sanctions/...</a>
If $1B collectively were to be donated to the democratic and republican parties via Tornado Cash (and they had to use TC to claim it), I suspect we'd see a pretty fast reversal of this sanction.<p>Sad state of affairs
>Any (d)app you use will instantly know your entire transaction history<p>>Imagine you sign up with your email on a random website and they suddenly now have access to your entire bank statement. Higher medical insurance premiums because they know that you transacted often in an online pharmacy. Expensive delivery charges because they know you can afford it.<p>Isn't this a major issue with Ethereum-SSO whether or not Tornado Cash is sanctioned? If you need to use a mixer to avoid any site you sign into gauging your net worth, isn't it kind of broken by default?
> Higher medical insurance premiums because they know that you transacted often in an online pharmacy. Expensive delivery charges because they know you can afford it.<p>Sometimes I manage to forget how depressing the healthcare system in the USA is, but am always jarringly reminded in the most unexpected of places
<i>What will happen to the tainted money? This figure is about 400M$. I expect a secondary market for TCtETH (Tornado cash tainted ETH)</i><p>This is why crypto was never fungible or useful for privacy purposes. Gold and other precious medals can be melted. Crypto can never be seamlessly mixed. No matter how hard you try, transactions and trails can be reconstructed. The only way to mix is to generate a huge amount of noise.<p>This was inevitable. For the past 2 years or so years hackers would process their loot with Tornado. There is no way the govt. would stand for this. It's similar to how the Wanna Cry hack , in 2017, made KYC much more common because the hackers used exchanges to convert stolen BTC into monero. All it takes is a handful of people to abuse a service for it to be tainted/ruined for everyone else.
The US has been hostile to the businesses around crypto for some time now, this is just one more reason to keep it away from the eyes of the US govmt if you are in their jurisdiction.
TCtETH is not a thing... Ethereum is not using a UTXO model and even if it was some serious off chain analysis would be required to make something like that work
This is why you don't publish addresses. Ever. You use them once and toss them. Any system that requires otherwise is subject to the same fate as Tornado eventually.<p>That said, blacklists are an asinine idea cooked up by people eager to score PR points. All it takes is one single conduit out to render the list useless in achieving its stated goal.
This fiasco really shines a spotlight the fundamental defect of crypto, which is that (if you're using it directly and not having a third party hold your assets) it's extremely <i>not</i> anonymous unless you behave exactly like a money launderer.
> While it is no secret that this service was used by criminals (like DPRK) to launder their money, there are some legitimate use cases for such a product as well.<p>It's funny how digital asset enthusiasts always conflate money laundering and private exchange of cash.<p>There are fixed legal limits of cash transfers. When crossing borders you literally have to declare cash exceeding certain amounts. In the US the police can even confiscate suspicious amounts of cash.<p>When they talk about private cash transactions as an equivalent of crypto money laundering, they pretend they're talking about putting a $20 bill in a Birthday gift card, buying a copy of Sports Illustrated at the bodega or tipping the neighbor's kid for mowing your lawn. These aren't scenarios where cryptocurrencies are currently useful and as long as cryptocurrencies behave more like a speculative asset (which doesn't seem to change any time soon) these will still be better served by cash.<p>What cryptocurrencies instead currently supplant are transactions that would otherwise be handled by bank transfers, credit card payments or online payment processors who have to follow very strict auditing requirements to explicitly prevent money laundering. If you provide a slower, more expensive, less widely used option whose main advantage is "privacy from government surveillance", it will attract exactly the kind of transactions that people don't want to do on systems designed to prevent money laundering. In other words: money laundering.<p>If you want digital cash that's hard to trace, scammers have long since found a tool for that: gift cards.
Am I supposed to feel terrible for people who got caught up in a money laundering scheme because they worked on the technology but maybe didn't actually launder any money? Because that's not going to happen. Anyone with a brain knew what Tornado Cashs' primary use case was, and they also had to know that governments are not fond of money laundering schemes. Leopards eat faces all the time.