The ruling comes down to the definition of "property", and the court finds that Tornado Cash's immutable smart contracts aren't property. Treasury can only sanction property under the law. Tornado is a tool that nobody controls, and which OFAC cannot sanction.
> Indeed, when someone has a property interest, he or she typically has the “rights of possession and control.” And “one of the most essential sticks in the bundle of rights that are commonly characterized as property” is “the right to exclude others.”
> The immutable smart contracts at issue in this appeal are not property because they are not capable of being owned. More than one thousand volunteers participated in a “trusted setup ceremony” to “irrevocably remov[e] the option for anyone to update, remove, or otherwise control those lines of code.” And as a result, no one can “exclude” anyone from using the Tornado Cash pool smart contracts.
Immutability is what makes this whole thing work for Tornado. The ruling is basically a whole explanation of why an immutable smart contract isn't property, isn't a service, isn't a patent, it isn't anything Treasury can touch. In fact, it's not even a "contract" (no counterparty).
But the mutable aspect of Tornado -- the optional gas fee anonymization middlemen, who are registered via a mutable smart contract -- they're still in the rough. Which makes the rally in the TORN coin those middlemen get paid in all the weirder.
It seems pretty clear to me that Treasury can sanction all of those Tornado relayers, because relayers have control over their actions; their participation happens through a mutable smart contract, and they can stop at any time.
It used to be that you buy crypto because you're either a true believer, you want to do something illegal and don't realize the blockchain is forever, or you think there's a greater fool.
Between recent sanctions and protectionist policies springing up, I wonder if there's more merit to crypto being a viable way to move large amounts of money outside the traditional financial system. Gold prices spent the 90's in decline, arguably as a peace dividend from the end of the Cold War and economic liberalization.
Maybe crypto is now a bet that there will be more need to facilitate gray market transactions as trade gets harder.
Is that not the same thing as being a true believer? I am a true believer (although the title is reductive to the point that you might as well just say cryptobro, it has the same connotations) partly because crypto enables transactions that governments need not approve of. A belief that a permissionless financial system is a positive thing is a big part of what makes someone a crypto 'true believer' I would think.
There's a true belief in crypto ultimately being how transactions are conducted, and there's a speculation hypothesis that more isolation means more extragovernmental transactions. That may or may not mean a higher price for tokens. So many people are hodling right now that it's more like an asset than a currency, so it's hard to say what its value would be if it were actually used as a currency.
As long as people have an appreciation mindset, it'll never actually be used as a currency since there's a disincentive to spend it. The price might just do what it does, and people use it for international transactions that are quickly converted to local currency.
[Recycling a comment from another submission on this]
> The court found the contracts aren't property because no one can control or change the application's code any longer. In fact, the creators took pains to make sure of that.
Hmmm... Hunting for analogies, perhaps it's like an event where people arrive at the park, everybody puts a fixed $20 in their own opaque anonymous box, and everyone blindly shuffles boxes before leaving with (probably) someone else's box, thus cross-shuffling their money/coins.
Sure, the $20 before and after is property, but the event itself isn't really own-able in the same way.
It's a fair decision legally, but I'm really quite uncomfortable to see a large financial services company bragging that it defeated government regulatory efforts and its customers can now freely transact with a money laundering service.
Eh... There's pretty good odds Coinbase will still give customers that either deposit to TC or have funds that came out of TC trouble because the broader AML compliance rules very much still exist.
What this ruling does mean though is that the government can't prosecute a US person for using TC.
>but I'm really quite uncomfortable to see a large financial services company bragging that it defeated government regulatory efforts and its customers can now freely transact with a money laundering service.
You should, but not becuse of what you said but because it's selective application of the Law; for example this is still being upheld [0] as we speak and clearly innocent people are having their lives ruined for using software on something that only until recently wasn't even considered money by the IRS/FINRA et al.
What you should feel uncomfortable with is the weight of a YC backed crypto exchange, ran by one of the most despised members of the community, being able to skirt around the legal system while others who do not have the political or business clout are held to a different standard in what was deemed 'overstepping' it's powers:
> U.S. Court of Appeals for the 5th Circuit ruling, so they can't be blocked under the International Emergency Economic Powers Act, and the Treasury's Office of Foreign Assets Control "overstepped its congressionally defined authority" when it did so.
PS: Armstrong represents the most reprehensible aspects of the Bitcoin community, but sadly due to a myriad of reasons (connections to banking and VC world being the top of that list) is now a custodial service for most of the non-self custody clients in this space. I cannot emphasize what a terrible outcome this is, and can only hope some good (like Samurai getting let go) comes from this travesty.
I don't think "selective" is really the right way to think about it. The people who wrote Tornado Cash remain in federal custody for money laundering, which I'm pretty confident they'll be convicted of. And anyone who uses the service to do money laundering would presumably be prosecuted as well, if the government can find them. Coinbase has just identified a regulatory loophole to prevent the service from being shut down.
(Is it possible to use Tornado Cash just for privacy? Sure, I guess, but I'm skeptical that many people do. The pooling mechanism makes it inconvenient to use for ordinary purposes with the pretty explicit purpose of helping money launderers.)
> What’s your issue with Armstrong? First I’ve heard anyone say he is despised?
The fact that I actually know what he has done since he and his Goldman Sachs cronies got involved, and leveraged thier SV connections to get backing to start coinbase which has been a constant thorn in our side ever since MTGX went down.
That people who admit to '[being] a fan of Elon and Twitter...' are oblivious to the constant gaslighting, scams, and derision he has inflicted within the bitcoin community isn't a shock, what is disappointing is how few critics there are of his for his actions.
He tried to scam noobs into thinking Bcash was Bitcoin on Coinbase during the USAF, that was the final nail in the coffin after a long history of reversing transactions and closing accounts etc... but as I said they hold an obscene amount of Bitcoin despite having been hostile towards Bitcoin and what it represents.
Boy I love the continued insistence in America that law should be based entirely on stupid, niche, completely made up technicalities instead of just accepting that laws are made for a purpose and that purpose should have just as much weight.
Glad that we will continue to live in a country where you only get rights if you can afford to construct an absurd business that abuses poorly thought out pedantry just to do the same thing that is explicitly illegal but "with computers so it's different".
The ruling comes down to the definition of "property", and the court finds that Tornado Cash's immutable smart contracts aren't property. Treasury can only sanction property under the law. Tornado is a tool that nobody controls, and which OFAC cannot sanction.
> Indeed, when someone has a property interest, he or she typically has the “rights of possession and control.” And “one of the most essential sticks in the bundle of rights that are commonly characterized as property” is “the right to exclude others.”
> The immutable smart contracts at issue in this appeal are not property because they are not capable of being owned. More than one thousand volunteers participated in a “trusted setup ceremony” to “irrevocably remov[e] the option for anyone to update, remove, or otherwise control those lines of code.” And as a result, no one can “exclude” anyone from using the Tornado Cash pool smart contracts.
Immutability is what makes this whole thing work for Tornado. The ruling is basically a whole explanation of why an immutable smart contract isn't property, isn't a service, isn't a patent, it isn't anything Treasury can touch. In fact, it's not even a "contract" (no counterparty).
But the mutable aspect of Tornado -- the optional gas fee anonymization middlemen, who are registered via a mutable smart contract -- they're still in the rough. Which makes the rally in the TORN coin those middlemen get paid in all the weirder.
It seems pretty clear to me that Treasury can sanction all of those Tornado relayers, because relayers have control over their actions; their participation happens through a mutable smart contract, and they can stop at any time.
It used to be that you buy crypto because you're either a true believer, you want to do something illegal and don't realize the blockchain is forever, or you think there's a greater fool.
Between recent sanctions and protectionist policies springing up, I wonder if there's more merit to crypto being a viable way to move large amounts of money outside the traditional financial system. Gold prices spent the 90's in decline, arguably as a peace dividend from the end of the Cold War and economic liberalization.
Maybe crypto is now a bet that there will be more need to facilitate gray market transactions as trade gets harder.
Is that not the same thing as being a true believer? I am a true believer (although the title is reductive to the point that you might as well just say cryptobro, it has the same connotations) partly because crypto enables transactions that governments need not approve of. A belief that a permissionless financial system is a positive thing is a big part of what makes someone a crypto 'true believer' I would think.
There's a true belief in crypto ultimately being how transactions are conducted, and there's a speculation hypothesis that more isolation means more extragovernmental transactions. That may or may not mean a higher price for tokens. So many people are hodling right now that it's more like an asset than a currency, so it's hard to say what its value would be if it were actually used as a currency.
As long as people have an appreciation mindset, it'll never actually be used as a currency since there's a disincentive to spend it. The price might just do what it does, and people use it for international transactions that are quickly converted to local currency.
[Recycling a comment from another submission on this]
> The court found the contracts aren't property because no one can control or change the application's code any longer. In fact, the creators took pains to make sure of that.
Hmmm... Hunting for analogies, perhaps it's like an event where people arrive at the park, everybody puts a fixed $20 in their own opaque anonymous box, and everyone blindly shuffles boxes before leaving with (probably) someone else's box, thus cross-shuffling their money/coins.
Sure, the $20 before and after is property, but the event itself isn't really own-able in the same way.
Correct title: Tornado Cash Sanctions Overturned by U.S. Appeals Court
It's a fair decision legally, but I'm really quite uncomfortable to see a large financial services company bragging that it defeated government regulatory efforts and its customers can now freely transact with a money laundering service.
Eh... There's pretty good odds Coinbase will still give customers that either deposit to TC or have funds that came out of TC trouble because the broader AML compliance rules very much still exist.
What this ruling does mean though is that the government can't prosecute a US person for using TC.
>but I'm really quite uncomfortable to see a large financial services company bragging that it defeated government regulatory efforts and its customers can now freely transact with a money laundering service.
You should, but not becuse of what you said but because it's selective application of the Law; for example this is still being upheld [0] as we speak and clearly innocent people are having their lives ruined for using software on something that only until recently wasn't even considered money by the IRS/FINRA et al.
What you should feel uncomfortable with is the weight of a YC backed crypto exchange, ran by one of the most despised members of the community, being able to skirt around the legal system while others who do not have the political or business clout are held to a different standard in what was deemed 'overstepping' it's powers:
> U.S. Court of Appeals for the 5th Circuit ruling, so they can't be blocked under the International Emergency Economic Powers Act, and the Treasury's Office of Foreign Assets Control "overstepped its congressionally defined authority" when it did so.
PS: Armstrong represents the most reprehensible aspects of the Bitcoin community, but sadly due to a myriad of reasons (connections to banking and VC world being the top of that list) is now a custodial service for most of the non-self custody clients in this space. I cannot emphasize what a terrible outcome this is, and can only hope some good (like Samurai getting let go) comes from this travesty.
What link is the [0] for, think it’s missing?
Sorry, I had a call and had do work rather than pretend o work while on HN after I posted this on the day ahead of thanksgiving. :0
0: https://www.justice.gov/usao-sdny/pr/founders-and-ceo-crypto...
I don't think "selective" is really the right way to think about it. The people who wrote Tornado Cash remain in federal custody for money laundering, which I'm pretty confident they'll be convicted of. And anyone who uses the service to do money laundering would presumably be prosecuted as well, if the government can find them. Coinbase has just identified a regulatory loophole to prevent the service from being shut down.
(Is it possible to use Tornado Cash just for privacy? Sure, I guess, but I'm skeptical that many people do. The pooling mechanism makes it inconvenient to use for ordinary purposes with the pretty explicit purpose of helping money launderers.)
What’s your issue with Armstrong? First I’ve heard anyone say he is despised?
> What’s your issue with Armstrong? First I’ve heard anyone say he is despised?
The fact that I actually know what he has done since he and his Goldman Sachs cronies got involved, and leveraged thier SV connections to get backing to start coinbase which has been a constant thorn in our side ever since MTGX went down.
That people who admit to '[being] a fan of Elon and Twitter...' are oblivious to the constant gaslighting, scams, and derision he has inflicted within the bitcoin community isn't a shock, what is disappointing is how few critics there are of his for his actions.
He tried to scam noobs into thinking Bcash was Bitcoin on Coinbase during the USAF, that was the final nail in the coffin after a long history of reversing transactions and closing accounts etc... but as I said they hold an obscene amount of Bitcoin despite having been hostile towards Bitcoin and what it represents.
The money laundering service won?
Boy I love the continued insistence in America that law should be based entirely on stupid, niche, completely made up technicalities instead of just accepting that laws are made for a purpose and that purpose should have just as much weight.
Glad that we will continue to live in a country where you only get rights if you can afford to construct an absurd business that abuses poorly thought out pedantry just to do the same thing that is explicitly illegal but "with computers so it's different".