> have never associated this with an intentional money laundering service
Most customers of a canonical money launderer, a laundromat, don’t realise it’s a front. That doesn’t matter if the owner is laundering money.
Tornado laundered money for North Korea [1]. (It announced this months before the sanctions, a period in which the developers could have reacted but didn’t [EDIT: in any meaningful way].) That it was also obfuscating legitimate flows is frankly irrelevant.
> Tornado devs blocked all OFAC addresses from accessing the frontend, which is the only power they had, since the contracts themselves are immutable
Which does nothing in practice. Any AML lawyer would have advised them so. The fact that the service was designed to be incompatible with the law isn’t a get-out-of-jail card.
I read the lawsuit in question. None of the plaintiffs were arrested. Their issue is that OFAC overstepped the bounds of their statutory authority, which none of your arguments address.
I'm also not aware of what US law would have been violated by either
1. Coding and publishing the tornado source code
2. Deploying several instances to the blockchain in 2019.
There's no US prosecutions based on creating or operating tornado. The Dutch one has not charged the person they arrested yet, according to https://www.coindesk.com/policy/2022/08/24/alleged-tornado-d..., so I don't know what unlawful actions they think he's responsible for.
> issue is that OFAC overstepped the bounds of their statutory authority, which none of your arguments address
Plaintiffs' argument relies on Tornado Cash not being "a person, entity, or organization" [1]. The complaint declares OFAC exceeded its statutory authority, but provides no specifics. (The code cited in ¶ 9 [2] gives courts the authority to tell agencies not to do bad things. That isn't an argument for or against OFAC's specific actions in this case.)
In summary, it's a hope-and-a-prayer complaint. Maybe someone at OFAC fucked up the paperwork, thereby giving rise to some modicum of relief.
> What would you say about Signal, designed to be incompatible with the law around lawful subpoenas?
It’s not. Subpoenas require handing over what you have. If you don’t have it there is no obligation to disclose. Signal may run afoul of data-retention laws. But there are no such requirements in America.
Not sure. Their problem. If the only option was shutting it down, that. It would have looked better, which could have prompted sympathetic legislation. At the very least, it would have likely avoided sanctions.
Close down until you figured out a way to react. Money laundering is serious crime, helping North Korea is as well. Tornado cash did apparently both, and authorities gave them a heads up. If it was me, I would close my shop down.
It cannot be shut down. The contract is immutable. It's still live, and it will still be live for decades to come, with new duplicates of the contract being published every day.
> It cannot be shut down. The contract is immutable.
If that’s truly the case, shut down as in stop developing it and advise users to stop using it. Then the addresses get sanctioned and nobody is surprised.
The part where Tornado Cash as an exchange couldn't shut down for a while. And the fact that those, well, "contracts" cannot be nullified like literally any other contract signed in any jurisdiction is troublesome in itself.
Lucky for Elon that he didn't use one of those contracts to buy Twitter.
Don't get confused by the terminology and don't get into word-thinking. A "contract" on the blockchain is nothing like a "contract" in the legal sense. Even if I get your signature on a blockchain saying that you are transferring your assets to me, there won't be any court willing to uphold this. In the same vein, it's not because that people talk about TC as a smart contract that gives it legal backing or makes it subject to the legalities of a "real world" contract.
You could call it "stored procedures" if you prefer, but at the end of the day outlawing tornado cash based on its code is as ridiculous as outlawing RSA.
What you describe, person A agreeing to sell over something to person B, even if just verbally, is a legal contract. Verbal contracts are perfectly legally binding, if somewhat hard to enforce for lack of proof. The lack of proof part is not a problem when it comes to blockchains, is it?
Just because it is virtual doesn't mean real world laws don't apply. What gave you that idea?
> person A agreeing to sell over something to person B, even if just verbally, is a legal contract.
This is not at all what I am saying. What I am saying is that a contract is the definition of terms of a transaction, while a smart contract is the execution of a transaction.
A "contract" defines what parties are supposed to do and the courts use to determine the legal process in case of disputes. Enforcement is not part of the contract.
A "smart contract" is just about enforcement. It makes no sense to talk about the "smart contract" being legally binding or not, much like it makes no sense to talk about "running computer code" or "firing a gun" being legally binding. Sure, you can discuss if the actions resulting from someone running a program to be legal or not, but this has nothing to do with those actions where established in a "legally bound contract" or not.
To put a proxy contract means that there will be an admin able to make contract upgrades. IOW, you need to have offchain trust in the contract deployer. This is widely regarded as a measure that defeats the purpose of decentralization.
So, yes, you could have an upgraded version of TC, but if you want to go that route you might simply use a centralized exchange as a mixer.
Sure, you are partially correct in your understanding.
I was only responding to some one who doesn't understand the ETH tech stack who said it was impossible. It most certainly isn't impossible and proxy contracts are how we deal with things like this in ETH.
You can't reasonably expect a random commenter to have full insight into their legal situation. They should have talked to their lawyers and found options. There is a chance that their financial service is incompatible with the laws in some jurisdictions, and so they might not be able to do business in those jurisdictions. Financial services are heavily regulated...
I think you’re confused about the facts of the situation here. There was no financial service being operated. There was no ongoing business. There was open source code that was thrown over the wall and was locked on the blockchain and immutable.
Most customers of a canonical money launderer, a laundromat, don’t realise it’s a front. That doesn’t matter if the owner is laundering money.
Tornado laundered money for North Korea [1]. (It announced this months before the sanctions, a period in which the developers could have reacted but didn’t [EDIT: in any meaningful way].) That it was also obfuscating legitimate flows is frankly irrelevant.
[1] https://www.bloomberg.com/news/articles/2022-08-08/crypto-mi...