Wow, just wow. Am i alone in thinking this is not going to fly if all he did was write some software that helps with your financial anonymity? There must be more. Perhaps he also deployed it? That would be a different story. The article is quite murky in that regard. Perhaps they don't know yet.

In there is an interesting paragraph explaining what Tornado Cash is:

… The (criminal) origin of the cryptocurrencies is often not or hardly checked by such mixing services. Users of a mixing service mostly do this to increase their anonymity.

Note how they sneaked "criminal" in there. There are of course legitimate reasons to desire anonymity for financial transactions! It's one of the reasons people like to pay cash.

Satoshi Nakamoto is wise to remain anonymous.

A lot of the apologists for this are making arguments along the lines of "being decentralized doesn't make you exempt from the rules" or "imagine if a bank laundered this much money".

The problem is it doesn't make sense to treat protocols like companies. And it definitely doesn't make sense to treat protocol devs as if they were the executives of those companies. The CEO of a bank and the lead dev of a protocol have very very different powers and responsibilities, and we can't just throw our hands up in the air and say "the law's the law, and you gotta follow it" (even when it's literally impossible given the decentralized and autonomous nature of the protocol).

Analogously when joint-stock corporations first entered the scene it required the development of whole new branches of Western law. That law had to be tailored to reflect the realities and nature of joint-stock corporations. What would have been very dumb is simply to pretend like nothing changed and say "same rules apply" and make individual shareholders liable for the action of the corporate entity the same way we're trying to make software devs liable for the action of the decentralized protocol.

How many people listed in the Panama papers have been arrested? Their assets seized? Fines? Zero. London's "the city" is pretty much one giant laundering operation for Saudi and Russian dirty money.

Money laundering, monetary privacy, wealth obfuscation is perfectly fine. It only becomes an issue when it becomes accessible to us simple minded folks too. The urgency to stop this tech really tells the tale.

Or in other words, laundering "doesn't scale".

My comment from 2 days ago:

> 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.

> 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.

> 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.



The effect of all of this nonsense will to drive developers into pseudonymity. It won't solve the "problem" of developers building privacy tools. It won't stop experimentation with shitcoins. But it will eliminate the phenomenon of the Buterin-style project lead and "core developer".

The bullseye has been painted. And now those who have reaped the benefits of fame will come to know why Satoshi concluded that it was a trap to be avoided. The legal pressure that will be brought to bear on the Ethereum foundation to enact various changes will be enormous and never-ending.

It doesn't matter whether or not this case flies. That will take many years to sort out. In the meantime, rational actors will do the rational thing. Everyone else will receive summons and indictments.

So a software developer is held responsible for the software. If the software is largely SaaS, then I can see the sense in that. A software developer of SaaS is also a service developer, arguably even a service operator although that depends on how the service is developed and operated.

I'm sure the judge will be thrilled to have to listen to arguments about the with the nuances of dev, ops, devops and a distributed platform such as that which executes Ethereum's smart contracts.

Sad to see the EU bow down to the criminal racket that is the US financial system.

Even if this developer is not extradited, the US has again succeeded in maintaining the culture of fear, where they can get their slimy hands on anyone anywhere for any reason they want.

If someone built something that said "Launder your money here" and it took in a bunch of money, and then disbursed it sans fees to hide where it came from... they'd say it was money laundering and arrest the person.

Can anyone explain the difference here? Or why anyone is "shocked" that this is happening cause it's crypto?

Just seems kinda childish to think crypto's somehow special and not just a tool for moving money around. Do people really think cause it's on the block chain it can evade every law in the world? And cause it's open source nobody's going to pay any attention?

For those who think this is good:

Private keys can be represented in text. Like this: KwTHJw865SLeTAjK7otYb5bL5mwutBb2vDxxF7kGf5XvY7QttnvM

Encrypted messaging apps like Matrix or Signal, can be used to send strings with private keys, anonymously.

It's very difficult to hold a position that financial privacy tools are bad, but encrypted messaging apps are good; because they are really not that different.

A message is circulating in russian crypto groups, that two more developers were arrested: Roman Panchenko in Seattle, and Nikita Dementyev in Tallinn.

(I can't verify the veracity of this report, but if true, this looks like it was a coordinated international police operation)

one of the most shameful moments in digital human rights after the arrest of pgp creator in 1993. Code is speech, it is not a weapon. Banning maths is fascist
Kind of unrelated but in a lot of ways I feel like an OFAC designation is a bill of attainder that is only legal because it’s used exclusively against foreigners.

1. Designate a businessman as an SDN

2. Wait for them to conduct some transaction that uses dollars or involves any American company in some way (if you know about correspondent banking you know this will almost inevitably happen)

3. Wait for them to travel to country friendly with America

4. Extradite for conspiring to violate IEEPA

This has happened before (see US v. Tajideen). It seems like there should be some kind of legal case against this which may happen now given all of the rich Russians that are having their stuff seized on this basis.

Edit: And the interesting thing is that the Treasury Department accused Tajideen of being a Hezbollah financier which they could have charged him with when he was extradited from Morocco but they didn’t which to me makes it seem like there wasn’t much of a basis for his designation to begin with.

There’s a big legal distinction whether the developers are collecting fees from operation of the service, since that’s very different from merely developing open source software. I’m curious how this develops

> It is suspected that persons behind this organisation have made large-scale profits from these transactions.

This makes so little sense to me. I don't know how much information is made public by the Dutch justice system but I would really like to see an affidavit or something like it to understand what specific charges are levied against that developer.
If I create a new type of leather wallet and then North Korea uses it for money laundering, can I be charged for "facilitation"? What about if I discovered electricity, which lead to money laundering?

Where is the line here, and who defines it?

This is an interesting case because it's applying financial law to a decentralised cryptocurrency operation. If research shows that Tornado was indeed processing a billion dollars of criminal funds then I'm not surprised arrests have been made even though it may be hard to prove actual involvement by the network operators. These numbers come close to the fund processing capacity of a small financial institution and there are

The points about DAOs are also interesting. DAOs have no central authority or elected leadership. Setting up a DAO should not be enough to get out of legal responsibilities of running a financial institution, but people voting in DAOs also shouldn't be treated like CEOs because they have very little actual power.

Conviction in this case might have a serious impact on decentralized crypto schemes. DAOs are a great technical workaround for not having a direct kind of leadership but the real world doesn't care about fancy technical solutions. Someone sets up a certain system and that someone has the responsibilities that come with setting up such system. If that service a free website, the responsibilities are extremely limited; if that service is a financial institution, your responsibilities become more serious.

Re: "this is just a dev", the dev also presumably ran the software they created, and with a seventh of the processed volume being criminal funds, it's almost sure that they operated on dirty funds at some point. Even if the developer's role in the (suspected criminal) DAO is considered insignificant, this might make the dev a money mule as he temporarily stored stolen funds in their crypto wallet. According to Dutch law, money mules may be prosecuted as complicit with fraud and any other financial crimes that take place.

One might defend the cryptocurrency operators by claiming that they can't verify the identities of their customers to comply with money laundering regulations, but that only underlines the illegality of the system: if your system isn't capable of complying with the law, you shouldn't operate such a system. It's like claiming you don't need seat belts in your cars because you can't figure out how seat belts work: your lack of control or creativity is not society's problem.

With how overloaded the courts are, it'll take months or even years to see the impact of this arrest. Whatever the outcome, it'll have a big impact.

Can anyone explain why Tornado cash dev was arrested but Zcash has been operating for years?
At least in the US, providing tools that you know will be used to commit a crime is a crime

Alfred Anaya Put Secret Compartments in Cars. So the DEA Put Him in Prison


Governments started the offensive. Now decentralization actually starts to matter.

Ethereum is switching to PoS at the last minute, PoW miners are very easily forced to enforce sanctions because they can't hide due to enormous physical and legal presence. Home stakers can easily hide and break the law.

What the fuck. I’m a big time crypto hater but this is absurd.

Are we really moving back in this direction? Let’s just ban math because criminals use cryptography.

This whole situation gives crypto more utility/validity. Arresting open source devs for such a simple smart contract? Insane!
This sentence provides a hint of what is going on:

"Since Monday 8 August 2022 Tornado Cash has been placed by the US government on the OFAC sanctions list of America."

The problem is that the devs decided to use a Microsoft service (Github) which has its jurisdiction in the US of A.

If only they had used Codeberg, this would not have been an issue at all, as Codeberg is self hosted and a free hosted version is in Germany.

Online privacy is at stake for years already. The cypherpunks have said it.
This isn't just the arrest of a developer expressing his freedom. Its the arrest of a developer who was knowingly part of a group of people who had the intention of deploying code (via smart contracts). The deployment of the code facilitated activities that were claimed to be illegal.

The issue isn't owning or writing viruses or malicious code, the issue is distribution and deployment of such code.

If this developer only created the mixing service smart contract and wasn't actively operating it or advocating for it, I doubt Dutch judges can rule him guilty for money laundering. The 9/11 reference made by others is very much on par.
I just don't understand how this is considered money laundering... this is coin laundering and it isn't regulated, as far as I know. The people will still have to explain where the cash comes from when they convert coins to cash?
I understand why they arrested him but it doesn't seem like he did anything thats illegal so it will be interesting to see what charge they bring or how they intend to differentiate between tornado cash and HSBC laundering money for cartels.
Ah yes, arrest developers of open source privacy code and blame them for North Korea money laundering rather than going after the people actually committing crimes. Sounds about right.

Privacy is not a crime, it’s a human right! Sorry that it makes the polices job harder, but our rights are more important.

And didn’t we go through all this already in the 90s? Are we now gonna start arresting all cryptographers?

This is because they don’t like money that is independent from state control. They hate the idea of bitcoin and eth not being $ or €. The large majority of money laundering happens through banks, who just pay a fine and sweep it under the rug.

It is said that they are prosecuted for:. "environmental crime"

Good example again of low profile laws that are abused by government and police forces to get to their objectives.

Silver lining: the powers that be tacitly admit that cryptocurrency is money.
He wasn’t just developing software, he seems to also been involved with operating the Tornado mixer service, thus enabling / facilitating money laundering and evasion of sanctions.
You'll never find Satoshi Nakamoto