It's a service specifically designed to facilitate money laundering. It's a bit like running a business that produces paperwork to make stolen cars indistinguishable from legal ones - there's no reason such a service should be allowed to exist.
TC is made for privacy, which either is or should be a basic right.
Without tools such as TC if I send you money, show you some POAPs[1] I own, or otherwise interact in any way with my crypto, it is fairly simple to deduce or make educated guesses of how much crypto I own, who I send it to or from, and more. This has serious implications not only for privacy, but for safety reasons too.
TC makes it so you can transfer from your cold wallet to your hot wallet, without trivially revealing what your cold wallet is (and thus your funds).
Furthermore TC also allows you to keep a receipt of these anonymous transfers, so you can in the future prove the origin of your funds or reveal such transactions.
There are a lot of laws banning knives of various sizes and constructions. I'm not sure you picked the example you want.
There are plenty of knives that are designed to facilitate murder, and they are correspondingly regulated.
We don't regulate kitchen knives in that way, because they don't represent the same intent.
If your financial instrument leaks all of your transactions and makes you a target of criminal scrutiny, you should consider using a different instrument. Society is not going to throw the baby out with the bathwater to accomodate your public immutable ledger.
I'm pretty sure the majority of knives used for criminal activities are rather kitchen knifes.
Compare Tornado Cash with cash money and tell me how they are different. Being untraceable does not make it a criminal instrument or does it? Is it criminal to conceal your financial transactions from the government?
Regardless of whether this is true (which it probably isn't, at least in the US), it doesn't change the intent. We regulate different things differently based on their intended use.
This should cover your second question as well. Intent is what the government cares about in this instance. And yes, it is indeed illegal to conceal your transactions from the government, at least insofar as they concern money that the government is entitled to tax or review.
Probably because banning knives is ludicrous behavior, so there aren't better examples.
So you can see for yourself: https://en.wikipedia.org/wiki/Switchblade
But the core point is that societies will ban things that generate more harm than benefit, be it real or perceived. This is the crux of the gun debate in America right now.
So here's the context for TD AFAICT: crypto is a competitor to fiat currency and all the hegemony that comes with it. It is a power play, and power doesn't come for free, and often is ultimately paid for with blood. Governments aren't just going to let a new wild west open up on that without any say-so. I think crypto enthusiasts either don't understand the implications of the tech or reject them on philosophical grounds, which I sympathize with but understand that doesn't change the reality as far as every stakeholder is involved.
I'm not sure I 100% agree with the statement "crypto is a competitor". Sometimes it's a currency, sometimes it's a commodity but at the end of the day, it's a store of value that humans own.
US dollars deposited in a bank and crypto in a wallet are owned by the same people, so it cannot be a competitor. It's just another asset class. The fact that Coinbase is a publicly traded company shows that the US government 100% accepts crypto as what I've described.
What they do care about are items and processes who's main purpose is for illegal activities. Guns are a perfect example. You want to buy and register a gun from a licensed dealer, no problem. You want to buy one from a guy in a van and scratch off the serial number, that's a problem. In the eyes of the government, Tornado Cash is too much like the guy in the van.
It's actually quite challenging to find a decent pocket knife that's legal to carry here: if the blade locks in place, it's not legal. So pretty much any Leatherman or Gerber that's not one of the mini ones is out, and all the cheaper brands are the same. I've taken to carrying a Geekey[1] and a knock-off Raptor[2].
[1]: https://geekey.com/ -- although the feature being headlined is the one I'm least likely to use.
[2]: https://www.leatherman.co.uk/collections/raptor-rescue/produ..., literally a quarter of the price without the branding: https://smile.amazon.co.uk/gp/product/B08ZSV5644
Victorinox split their pocket knives into three categories: small, medium, and large. Only the large are comparable in size to multitools, and they all seem to have locking blades.
I'm actually pondering getting a basic medium-size pocket knife though, to complement what I'm carrying at the moment. Thank you for reminding me :).
> KEY TAKEAWAYS
> The Bank Secrecy Act (BSA) is U.S. legislation aimed at preventing criminals from using financial institutions to hide or launder money.
> The law requires financial institutions to provide documentation to regulators whenever their clients deal with suspicious cash transactions involving sums over $10,000.
> The law does not require documentation for every transaction over $10,000, but businesses must file Internal Revenue Service (IRS) Form 8300 if they receive more than $10,000 in cash from one buyer.
With the invention of paperless transaction, Government steps in and ensure every transaction record is there to show the party of the transaction. This happened, before the invention of the internet.
If you wanna fight, then you will have to undo all the legal changes.
Compare of the little loss of the privacy, and the possibility of funding the evil state like North Korea and its infamous neighbour. I would choose get rid of the evil country.
Damn, those goalposts moved like lightning. From "making it a bit harder for North Korea to get a bit of extra cash" to "abolishing the North Korean government" in a single sentence.
People going all pikachu face on this story is really weird as fuck. It was obvious this was going to happen.
The hair you're attempting to split between "laundering" and "washing" does not exist in the financial world, and would not impress financial regulators.
It does to those who believe in financial privacy.
The government will not carve out a subset of crimes because of an unnecessary self-imposed restriction on financial privacy.
You can revoke that consent, as it is possible to become a citizen of no country, but I wouldn't recommend it.
But there is a collectively hashed-out social contract you accept by staying, and it should be of no surprise that the law takes that contract as table stakes and acts according to it.
Comparing your financial scheme to Jim Crow isn't the most distasteful thing I've seen on HN, but it's up there!
It's not my financial scheme, it's the social contract.
Comparing that to hiding your financial transactions so you avoid KYC is genuinely embarrassing.
Granted, that's assuming you're a valuable enough contributor to society that you'll find another country interested in taking you, one that won't similarly have expectations around "people in a society should pay taxes", but that's a you problem.
Or you can choose to live in a country that has a tax treaty with US; either way you get to deduct local tax rate paid so you're not double taxed.
Not true, this tool exists to provide privacy on an otherwise public ledger. Your tax assessor has no right to know about a transaction as soon as it occurs. A crime is only committed if you don't voluntarily declare it at a certain point in the future.
LE laziness and citizens conceding territory unnecessarily is creating a nanny state.
In other words: you can use a hot dog stand to launder money. But if you were to intentionally establish a hot dog stand for the purpose of laundering money, the government would be absolutely correct in seizing your stand.
Same goes for Tornado Cash. It was not designed for money laundering, although you could use it for that. If the US government finds cases of money laundering happening, take down the entities doing the money laundering instead of attacking a tool.
If you think Tornado Cash was designed for money laundering, please point us to the documents where this is mentioned. I've personally followed the development of the project, but never saw any mentions of money laundering at all, anywhere.
No one's going to advertise openly to the public "Assassination services here! Just call 1-800-KIL-THEM!"
And no one's going to put in public documents "we set up this company in order to facilitate money laundering."
Therefore, they intended it to be used to hide transactions from the US government. They could have also limited the service to not run on amounts larger than 10k?
Are you suggesting that there is no plausible reason to want financial privacy, outside money laundering?
By contrast, a hotdog stand is typically designed to cook and sell hotdogs and, in the rare instances where money laundering occurs, it's not a primary service the hotdog stand offers to clients, and will still get the owner arrested.
It does have other purposes, hiding transactions from the public, which I have used Tornado Cash for many times in the past.
> I used Tornado Cash (non-US citizen here) for hiding transactions from the public (not hiding from the government), and when I filed my taxes, I still accounted for everything that is stored there + transacted via Tornado Cash, just like I do for my bank account. Appendix contained instructions for how they could access the proof of my transactions and accounts to verify themselves.
Not sure why people think what I did should be illegal, I'm paying my taxes and declare everything just like everyone else, but somehow I shouldn't be allowed to hide my transactions from randoms on the internet?
You can do this. But it doesn’t come without risk.
If you kept using Tornado even after it was found Pyongyang used it to launder money, yes, you lose your money. It’s analogous to local law enforcement announcing a laundromat has been laundering money for the mafia, and then—months later–someone getting upset the clothes they dropped off have been seized. They may eventually get them back. But there is reasonable suspicion in the meantime.
https://www.icij.org/investigations/fincen-files/global-bank...
2) Because those are major, highly entrenched banks, they not only have the resources to ensure that stories about them engaging in bad behavior get swept under the rug (which doesn't mean "no coverage", but does mean they don't get covered as much as they might perhaps deserve), they also have the connections to make it very unlikely that they will face any kind of meaningful repercussions for this.
This is quite unfortunate, and a decidedly negative aspect of our current system. But the answer to it is not "so other companies like TornadoCash should be allowed to break the law with impunity, too!" It's "so we need to find ways to change our system so that we can genuinely hold accountable big banks and others who currently break the law with impunity."
This is what they’re doing. North Korea laundered money via Tornado Cash [1]. Authorities announced it and watched Tornado Cash do nothing. So it got sanctioned. Every other mixer is untouched.
[1] https://www.cnbc.com/2022/06/30/north-korea-likely-behind-10....
North Korea also used HTTP for navigating websites which helped them hack targets and also launder more money. Banning Tornado Cash is like banning the HTTP specification/IETF for that, instead of going after the group in North Korea doing the money laundering/hacking.
There was a team of developers earning compensation, hiring and firing. That’s more than just code.
Guns are quite literally just atoms. The context matters. Not all guns are illegal. But ones used to commit crimes will get lawfully seized. The code exists in context, and the developers’ actions and intentions are relevant. None of this is novel.
This is the kind of sociopathic irresponsibility that's too common in tech. "Oh, it's not my fault my lab-grown monster decided to terrorize the countryside!"
That’s like saying TLS was designed to protect CP.
Privacy =/= laundering
It's not illegal whatsoever to mix up my dollar bills with a group of other people and get the same amount out that I put in. Such a statement is ridiculous.
I don't think the crypto industry is lacking in funding enough to be able to hire lobbyists, so I'm not sure why we might blame a legislature that can't be experts in literally everything (setting aside the fact that they tend to be fuddy-duddies for other reasons, it's not even theoretically practical that they could be perfectly informed on everything) for not having made perfect laws around a new industry.
Furthermore, actions are not usually the things that are illegal. Usually the law prohibits actions which cause a specific effect. Like murder or pollution. You dont get one free murder every time you figure out a new way to kill people.
Here ya go.
By the by, all of this is to be known or planned out before becoming a money transmitter.
I.e., if you cannot do this, you are not legally allowed to serve as a money transmitter.
[1] https://www.justice.gov/archives/jm/criminal-resource-manual...
Here ya go.
If you use Pokemon cards in such a way as there is a reasonable expectation they may get converted back to dollary-dos, you are required to track that too. Sorry mate. Nice try. But no.
Thank you, come again.
I get it. It's frustrating. If only the means of exchange wasn't such a pivotal part of criminal enterprise, or people would just not do illegal things, we could have nice things. Alas, tis not the case.
If you don't, you're laundering. It's like a bunch of tech people waltzed into finance, ignored the entire history of the institution, and lessons paid for in blood, and expect everyone else to bend over backwards for them.