He resides in Colorado according to his Linkedin. I don't know a whole lot about crypto - is there anyway he can meaningfully use the donation given the Tornado Cash sanctions? Could just simply being in possession of Tornado Cash Ether give rise to legal problems for him even if he doesn't touch it? Even though it's quite a generous sum amount of money, can't help but wonder if it was sent with ill intentions or if the sender simply lives in a different country and didn't think about the US sanctions
Not sure why you are bring downvoted as it is pretty close to Treasury recent FAQ[1] on dusting:
"OFAC is aware of reports following the designation of Tornado Cash that certain U.S. persons may have received unsolicited and nominal amounts of virtual currency or other virtual assets from Tornado Cash, a practice commonly referred to as “dusting.” Technically, OFAC’s regulations would apply to these transactions. To the extent, however, these “dusting” transactions have no other sanctions nexus besides Tornado Cash, OFAC will not prioritize enforcement against the delayed receipt of initial blocking reports and subsequent annual reports of blocked property from such U.S. persons.
For guidance related to filing an initial and annual report of blocked property, please see FAQs 49, 50, and 646, respectively, and 31 C.F.R. § 501.603. Please note that the annual filing requirement for 2022 applies only to persons holding blocked property as of June 30 of this year.
Released on 09/13/2022 "
The individuals that got ETH may have some reporting requirements, but OFAC seems to understand it is an effort to make enforcement complicated by design.
Yeah and that is why I think they may end up having to report it to OFAC anyway and keep submitting annual updates. As always, at this amount, I would consider asking a specialized attorney ( although, ever since Russia invaded Ukraine, they had their hands full ).
The treasury is using "nominal" to describe what the word "dusting" means... it is when someone sends small amounts of sanctioned crypto to a bunch of accounts. This is from an FAQ article that confirms: yes, even small amounts are in violation of sanction laws.
If a $5 transaction breaks the law, then $400,000 also does.
If he reports all relevant transactions involving this Ether to OFAC, will he avoid legal repercussions? I noticed a commenter on Twitter brought up the Tornado Cash issue so I wonder if he didn't know before he moved it, because why else would he move sanctioned crypto. Even though OFAC decided to not enforce "nominal" transactions, ~$400k worth of Ether is certainly not nominal so I would guess he needs to cover his ass ASAP.
(edit: If the money is from Tornado Cash), the money is sanctioned, he has to block it from being used anywhere and he must report it within 10 days according to the law (although the treasury realizes that many people receiving this money don't have legal compliance on staff and so they're cutting people slack)
> U.S. persons may have received unsolicited and nominal amounts of virtual currency [...] from Tornado Cash, [...] Technically, OFAC’s regulations would apply to these transactions.
> Once a U.S. person determines that they hold virtual currency that is required to be blocked pursuant to OFAC's regulations, the U.S. person must deny all parties access to that virtual currency, ensure that they comply with OFAC regulations related to the holding and reporting of blocked assets, and implement controls that align with a risk-based approach.
> 31 C.F.R. Parts §§501.603 and 501.604 require blocking and reject reports to be submitted to OFAC within 10 business days
> A report of blocked property is to be submitted annually by September 30
I appreciate OFAC being reasonable; it’d be nice if they used Chainalysis to track the digital asset movement and give folks a way to tag their wallet with AML/KYC info for automated compliance purposes. These are public ledgers after all, the reporting does itself for the most part.
Can you send the asset to an OFAC address for seizure and custody to wipe your hands of the issue?
I was thinking if I was receiving this Donation, the amount of stress and anxiety it would cost me in the aggregate would surpass any kind of monetary benefit.
> the U.S. person must deny all parties access to that virtual currency
With Bitcoin that would be relatively straightforward: Just ignore the UTXO because the incoming funds are clearly separated from any preexisting funds.
But with Ethereum that's different due to the account-based approach: What's the impact if those funds are intermingled with preexisting funds on the same Ethereum address? Is it now unsafe to spend any of those funds or can existing funds be spent as long as the minimum balance doesn't fall below the amount of sanctioned funds?
Also what's the impact in terms of taxes: Could there be a situation where Redox OS needs to pay taxes on those 299 Ether but at the same time is not able to disburse them? Due to the high crypto volatility this could become a headache quickly: Imagine having to pay taxes for this year, but then due to the sanction only being able to actually sell those Ether in a later year when the price could be potentially a lot less than the tax liability.
I don't think that sanctioned money is income, but these are all good questions that I'd be asking my lawyer/IRS/treasury if I got a donation like this.
> No, the money is sanctioned, he has to block it from being used anywhere and he must report it within 10 days according to the law
This is not correct.
> U.S. persons may have received unsolicited and nominal amounts of virtual currency [...] from Tornado Cash
Because he did not receive those funds from Tornado Cash. He received them from a third party. This third party has interacted with a sanctioned entity (Tornado Cash), but sanctions are not transitive.
You can test this easily w/o cryptocurrency: You may not be allowed to transact with Iran, but you can buy stuff from a Germany company which has business with Iran - until OFAC may want to decide to sanction the Germany company.
The "dusting attacks" the OFAC FAQ refers to are transactions that someone sends directly from the TC smart contract to your wallet.
Once he touches this laundered ETH, he’ll face a whole host of legal issues.
I’m assuming that the IRS and all the other relevant authorities already know about this and are ready to pounce on Redox once they touch that Tornado ETH.
It is worth just sending that tainted ETH to a dead wallet to avoid all that trouble.
Interesting attack: find a digital currency recognized by the IRS that is, for whatever reason, impossible to cash out, and donate a giant amount to target of choice.
That's slightly limited by the fact that they'd probably need a wallet to begin with. Like, I couldn't be the target of an ETH bomb because I don't have any ethereum wallets. Receiving too big of a donation seems like not the worst problem if you were already open to receiving donations in that currency.
You don’t need a wallet to be a victim of this. For example, someone could create an address only you can access with your Github public SSH key or the TLS public key of the project website (any public key that only you have the private key to will work).
This was part of the big gittip controversy a few years ago where open source projects didn't want to do the tax paperwork they were now obligated to do by gittip holding funds in their name for like $50/year.
This seems like the sort of thing we'll need some cases to resolve.
If someone hides some valuable assets somewhere on your property and without telling you, presumably the IRS has some less-painful way of resolving this as long as you make a good faith effort to do so as soon as you become aware of it.
Why would the "victim" care (or even find out about) this "attack"? My understanding is that because eth is fungible, it would poison an existing wallet with funds in it. I.e. if you have $5 in coins, and I give you $5 more in stolen coins, your entire coinpurse is essentially tainted. Your example would just be giving somebody a tainted wallet. Worst case scenario, you cycle your keys.
It's not an issue. Regulator established dead-drop address, you move the requested amount. You're good to go. Forensic accounting is quite simple in that regard.
If somebody buries a pile of gold in the desert, then sends a treasure map to my P.O. Box, I don't think the IRS is going to be knocking down my door, unless I actually go get the gold and do something with it. Until I take possession of the gold, nobody even knows if there is gold or not.
You'd probably pay the IRS for a private letter ruling telling you what you should do. They're more expensive then they should be, but you really do not want to mess up and be stuck with a $100,000 tax bill on unspendable money.
cue: Coinbase blocked my account without explanation!
from what I can tell, even if you got a license or reported to the Treasury, crypto exchanges and crypto services will auto-block you anyway and aren't prepared for exceptions and edge cases.
Similarly, the VTB bank case recently was interestingly. VTB was sued in some complaint about the downing of the MH-17 flight but despite OFAC providing an exemption for legal services the law firm they chose couldn't get any bank to process their payment. Maybe some sharp legal mind will argue that sanctions have a chilling effect that can violate the accused's right to counsel.
This is really the ideal move. Let Coinbase lawyers figure it out. They have the legal expertise and better resources to determine potential connections to crime than anyone else does.
If Coinbase seizes the money, that's fine. If they let him keep it, then there's no better way to cash out than through Coinbase. It's going to generate an automatic love letter to the IRS with all the details of the transactions, and he'll be taxed appropriately.
See all it takes is being sanctioned by the treasury to bring out the good in people. On a more serious note though can he use the funds at all? I imagine even sending it back would be a violation of the sanction.
That’s the kind of thing where you get a good lawyer to have a conversation with the state followed by a lawsuit to get the ambiguous question turned into case law.
Probably the US Treasury department which did the sanctioning or whomever else is trying to stop you from using the funds. Basically whoever says "no" when you start the conversation.
I wonder if the Treasury will ever go after people running Eth validators. Storage on blockchain, thus far, has been too expensive to store significant amounts of copyrighted material. But you have to wonder what would happen if the blockchain stored serious amounts of material that was illegal in some form, e.g. currency from a sanctioned system like Tornado Cash or a collection of Disney movies.
The information on the blockchain is not illegal. It is not illegal to store the sanctioned addresses or tornaco cash smart contract source code. What is illegal is spending those funds, or allowing customers to transact with them. In fact, you need the addresses and contract details to block those transactions.
Copyrighted material on blockchain has been discussed many times, it is just not viable attack because blockchain space is crazy expensive. There has been various data uploaded to the blockchain but you also need scripts to extract that data, so it also raises the question if that is even that accessible data.
The paper’s authors indicate that there is one image that is arguably CSAM (in addition to the hundreds of links to what is definitely CSAM): “Bitcoin’s blockchain contains at least eight files with sexual content. While five files only show, describe, or link to mildly pornographic content, we consider the remaining three instances objectionable for almost all jurisdictions: Two of them are backups of link lists to child pornography, containing 274 links to websites, 142 of which refer to Tor hidden services. The remaining instance is an image depicting mild nudity of a young woman. In an online forum this image is claimed to show child pornography, albeit this claim cannot be verified (due to ethical concerns we refrain from providing a citation).”
I'm not sure this is a good parallel, both because the blockchain itself isn't an entity which can be made responsible, only users of it, and also because a discussion over the phone isn't copyright material being hosted. I suspect nodes serving the blockchain could be made liable similar to torrent peers.
Seems impractical to expect end users to monitor the history of where money sent to them comes from. Would expect enforcement to be at the currency exchange point.
If you purchase eth now, how can you be sure you don't have eth that came from tornado or some other prescribed system? If I buy through a reputable seller, say coinbase, will they be able to certify my crypto is valid?
It's not impractical at all. Laws around money laundering and handling stolen goods generally say that you're at fault if you had a reasonable suspicion that the item was the proceeds of crime.
Guess it would have been nicer of the donator to send it in small increments instead so plausible deniability (or actual non detection) was more possible.
What do you mean on the hook for what? You're supposed to include that in your EOY taxes and AFAIK you're also not allowed to sell to sanctioned entities. No one will care in all likelihood but you're still not supposed to.
Absolutely tragic that the US government's war on anonymous transactions is getting in the way of FOSS receiving donations here. I presume the donations itself is an attempt to make a statement, and I applaud it. Make people feel the impact of this attempt of absolute financial control without hurting them. I hope the developer can get access to the funds in the end!
If someone donated me a brand new mid-engine Corvette, it would be a huge headache because I couldn't afford the taxes & maintenance.
I think in this case, FOSS would stand to gain more by not receiving money-laundered transactions which, as someone else pointed out in this discussion, would create a compliance nightmare.
To put it this way: would you accept 1,000 dollars from me if it would take you 100 hours of your life to receive?
I suppose that in this case the project received enough money to hire two lawyers to deal with it full time for a year, so as long as there's a chance it could still be worth it. I'd put the odds pretty low, though.
If someone gives you a brand new car, and you really don't want to be bothered with it, I think you could arrange a sale for 2/3 its value in a couple hours.
> To put it this way: would you accept 1,000 dollars from me if it would take you 100 hours of your life to receive?
Does that really apply here? If this money can't be touched, then it's a minor time sink with zero benefit.
If there is a way to dump in 100 hours and extract the money, it's worth it because it's so much.
Right, and that's the point. If an open source project can't receive an anonymous donation without a "compliance nightmare", then what does that say about the laws and regulations which created that nightmare in the first place?
Keep in mind that there is, as of right now, no evidence that this cash was "laundered" or in any way associated with any nefarious activity. It's merely anonymous.
> If an open source project can't receive an anonymous donation without a "compliance nightmare", then what does that say about the laws and regulations which created that nightmare in the first place?
This makes it sound like this happened in a vacuum, but those laws and regulations are in response to real world events and you have to consider that when talking about whether laws are unreasonable. For example, many people would have ethical objections to accepting a donation from an unknown source (what if the money was generated from some activity I object to?), don't want to deal with potential hassle if the source does something to trigger legal attention, or the risk of a non-zero chance of some unsavory sorts showing up and “suggesting” that you give them some fraction of it as clean cash, etc.
Allowing anonymous transactions means that the latter two kinds of events will happen on an somewhat regular basis, which is why most people accept laws requiring financial institutions to know their customers' identities as a necessary cost. If you say magic internet money is exempted from those requirements, well, there are going to be a whole bunch of surprisingly well-funded open source projects in Mexico paying salaries which make FAANG employees weep with envy.
Who can receive $400k today from an unknown source without any questions asked? Nobody — not an ordinary person, not a small business, not a foundation.
What exactly makes an open source project so special that it should be exempt from the regulations that apply to everyone else?
And if that were the case, what would prevent an open source project from being just a smokescreen for something else? Obscure API implementations paying pseudonymous developers for PRs with anonymous donation money seems like a fine kind of laundering operation.
> Obscure API implementations paying pseudonymous developers for PRs with anonymous donation money seems like a fine kind of laundering operation.
If that happens then you investigate, find out if it is a money laundering scheme, and bring a criminal prosecution if it is. You don't just assume they're guilty because the transaction was anonymous, or ban privacy tools and conduct mass surveillance on every transaction to make sure none of them are suspicious.
It's kinda wild how many people on HN suddenly become anti decentralization and pro mass surveillance whenever the topic of cryptocurrency comes up.
>Absolutely tragic that the US government's war on anonymous transactions is getting in the way of FOSS receiving donations here
No, the intent of the donation is to cause trouble to FOSS projects and waste their time. Not sure why you're appreciating this. It's like donating stolen property to the local orphanage.
The sanctions caused the donation. Criminals with big bucks in their account are blowing it on donations because they can't convert it to Lamborghinis, hookers, and mansions anymore.
Tornado Cash wasn't some haven for big money philanthropy pre-sanctions.
You seem to be going so far out of your way to be uncharitable that you've stopped caring about whether your statement makes the slightest bit of sense. Surely there's still some form of mindless consumption available that would provide more entertainment than donations to FOSS projects? It's not a very high bar to clear?
The folks running ransomware rings make a lot of money. Sending $400k to a project they like might be their mindless entertainment. There's only so many ways to spend money that doesn't involve meatspace transactions... which you'd probably want to avoid if you know your wallet is being scrutinized by the best-funded investigators on the planet.
I don't know how I can prove a negative. Here's a list of all philanthropist FOSS project donors I'm aware of who spoke out against the Tornado Cash sanctions, and all the Twitter posts of surprised FOSS project developers who were happy to receive gigantic donations from TC pre-sanctions:
[]
We can, however, consider your sources of people who did speak out -- none of them are philanthropists who contributed to large sums to FOSS projects. They were ETH enthusiasts who spoke up to make a point. The probably made some incidental donations to causes they supported, as a matter of being ETH enthusiasts.
Philanthropists use fiat, de facto. Anything else is notable.
If the donor tried to make a statement by getting a FOSS developer in trouble with the IRS, that is not something to applaud! The people being who would be punished here are not the people attempting absolute financial control. I would not very publicly send a "donation" of valuable but illegal drugs to my favorite charity, even though I support ending the war on drugs.
Putting the legal discussion to one side, interestingly the donor signed a UTF-8 message in one of his transactions. It reads: "Qubes address? GrapheneOS address?". Maybe implying he wants to give similar amounts to those two projects as well?
I agree. Although $300,000 is a drop in the bucket for paid advertising. Yet here we are talking about these things - Qubes, whatever this is... Then again what is the CTA? So puzzling.
Not necessarily. Give a bacterial culture too high a concentration of sugar and the bacteria may even die from the resulting hypertonic osmotic pressure.
I don't know about faster but they all sure could use money to hire better UX designers and QA testing pipeline and do UAT/marketing.
But if their leadership just want to make another piece of software by niche enthusiasts for other niche enthusiasts of some topic then that money is wasted on them.
A good example of where such money has become useful is Signal. Fulltime devs close more issues.
This large donation really changes the dynamics of KYC laws. It’s absurd we don’t dissolve our legal system so transactions like this can happen on occasion.
There was recently a post about the amount of fraud that is acceptable for payment processors. For example in that case, a certain amount of fraud is acceptable because without it the payment procedures would never be at the exact equilibrium between discomfort and fraud percentage.
In such a scenario we try to enforce so KYC so much that we competely disregard the good that lack of KYC could do for us. What if this is drug money being used for actual good things? In some ways you couod say that the system is working: sometimes ignoring the law brings good to the society.
I am bringing here the same argument that would be used towards never prosecuting people for crimes that were discovered when someone has already reported a crime: i.e. if someone submits a DNA sample due to being raped can not be prosecuted for petty crime that was discovered due to it as that would make people in that situation do even more crime.
IANAL but I feel there's a lot of misinformation in this thread.
There is no such thing as "tainted" ETH. The ETH was transferred from address 0x4B6275DB08c61aeFBa7bADaaE93aa853e377CddB which is not a sanctioned address[0]. It is therefore fine to receive and spend that ETH.
It is possible that the donator violated US sanctions by taking it out of the Tornado Cash smart contract if: 1) they are a US person/under US jurisdiction 2) they are the same person that withdrew them from the Tornado Cash contract (not necessarily true).
Additionally, businesses which are not "money transmitters" (e.g. banks, crypto exchanges, etc.) are not subject to KYC regulations and are under no legal obligation to know the identity of their customers or donators.
Finally, I'd like to add that privacy-enhancing smart contracts like Tornado Cash have legitimate uses and were used for legitimate reasons, notably by Ethereum cofounder Vitalik Buterin who probably didn't like everyone observing and commenting on his Ethereum spending habits. I've seen a lot of "crypto critics" simultaneously criticize the transparency of blockchains and smart contracts like Tornado Cash which fix the problem...
128 comments
[ 3.3 ms ] story [ 190 ms ] threadhttps://twitter.com/jeremy_soller/status/1572350419594268673
Everyone has been dusted by Tornado Cash tainted ETH so it's unlikely they'll go after him.
"OFAC is aware of reports following the designation of Tornado Cash that certain U.S. persons may have received unsolicited and nominal amounts of virtual currency or other virtual assets from Tornado Cash, a practice commonly referred to as “dusting.” Technically, OFAC’s regulations would apply to these transactions. To the extent, however, these “dusting” transactions have no other sanctions nexus besides Tornado Cash, OFAC will not prioritize enforcement against the delayed receipt of initial blocking reports and subsequent annual reports of blocked property from such U.S. persons.
For guidance related to filing an initial and annual report of blocked property, please see FAQs 49, 50, and 646, respectively, and 31 C.F.R. § 501.603. Please note that the annual filing requirement for 2022 applies only to persons holding blocked property as of June 30 of this year. Released on 09/13/2022 "
The individuals that got ETH may have some reporting requirements, but OFAC seems to understand it is an effort to make enforcement complicated by design.
[1]https://home.treasury.gov/policy-issues/financial-sanctions/...
If a $5 transaction breaks the law, then $400,000 also does.
The FAQ is saying "don't freak out, here are some forms to fill out to start straightening out this mess" I think.
> U.S. persons may have received unsolicited and nominal amounts of virtual currency [...] from Tornado Cash, [...] Technically, OFAC’s regulations would apply to these transactions.
> Once a U.S. person determines that they hold virtual currency that is required to be blocked pursuant to OFAC's regulations, the U.S. person must deny all parties access to that virtual currency, ensure that they comply with OFAC regulations related to the holding and reporting of blocked assets, and implement controls that align with a risk-based approach.
> 31 C.F.R. Parts §§501.603 and 501.604 require blocking and reject reports to be submitted to OFAC within 10 business days
> A report of blocked property is to be submitted annually by September 30
https://home.treasury.gov/policy-issues/financial-sanctions/...
The only thing that was donated here is a legal compliance headache that will continue for years to come.
Can you send the asset to an OFAC address for seizure and custody to wipe your hands of the issue?
With Bitcoin that would be relatively straightforward: Just ignore the UTXO because the incoming funds are clearly separated from any preexisting funds.
But with Ethereum that's different due to the account-based approach: What's the impact if those funds are intermingled with preexisting funds on the same Ethereum address? Is it now unsafe to spend any of those funds or can existing funds be spent as long as the minimum balance doesn't fall below the amount of sanctioned funds?
Also what's the impact in terms of taxes: Could there be a situation where Redox OS needs to pay taxes on those 299 Ether but at the same time is not able to disburse them? Due to the high crypto volatility this could become a headache quickly: Imagine having to pay taxes for this year, but then due to the sanction only being able to actually sell those Ether in a later year when the price could be potentially a lot less than the tax liability.
https://home.treasury.gov/policy-issues/financial-sanctions/...
I don't think that sanctioned money is income, but these are all good questions that I'd be asking my lawyer/IRS/treasury if I got a donation like this.
This is not correct.
> U.S. persons may have received unsolicited and nominal amounts of virtual currency [...] from Tornado Cash
Because he did not receive those funds from Tornado Cash. He received them from a third party. This third party has interacted with a sanctioned entity (Tornado Cash), but sanctions are not transitive.
You can test this easily w/o cryptocurrency: You may not be allowed to transact with Iran, but you can buy stuff from a Germany company which has business with Iran - until OFAC may want to decide to sanction the Germany company.
The "dusting attacks" the OFAC FAQ refers to are transactions that someone sends directly from the TC smart contract to your wallet.
Fair, I made the comment under the assumption that the title of this submission was accurate.
Once he touches this laundered ETH, he’ll face a whole host of legal issues.
I’m assuming that the IRS and all the other relevant authorities already know about this and are ready to pounce on Redox once they touch that Tornado ETH.
It is worth just sending that tainted ETH to a dead wallet to avoid all that trouble.
If someone hides some valuable assets somewhere on your property and without telling you, presumably the IRS has some less-painful way of resolving this as long as you make a good faith effort to do so as soon as you become aware of it.
from what I can tell, even if you got a license or reported to the Treasury, crypto exchanges and crypto services will auto-block you anyway and aren't prepared for exceptions and edge cases.
a great lawyer knows the judge
If Coinbase seizes the money, that's fine. If they let him keep it, then there's no better way to cash out than through Coinbase. It's going to generate an automatic love letter to the IRS with all the details of the transactions, and he'll be taxed appropriately.
Copyrighted material on blockchain has been discussed many times, it is just not viable attack because blockchain space is crazy expensive. There has been various data uploaded to the blockchain but you also need scripts to extract that data, so it also raises the question if that is even that accessible data.
Validators aren't just storing the information. They're actively processing transactions and getting paid to do it.
> Copyrighted material on blockchain has been discussed many times, it is just not viable attack because blockchain space is crazy expensive.
That's not a very satisfying conclusion to the topic
That’s expensive, but not impossible for a stunt.
[0]: https://fc18.ifca.ai/preproceedings/6.pdf
what someone on twitter wrote is pretty apt:
deposit the Ether in AAVE to borrow USDC, move the USDC to another address and send that to Coinbase to cash out
pretty much just walk away from the deposited Ether, let that get collateral called eventually. The protocol can enjoy its sanctioned money.
Well, this is what it actually means: you’re on the hook for enforcing sanctions and all kinds of shit that banks do.
Of course. Making it impractical through enforcement of laws will benefit governments efforts to crush crypto, no?
>Would expect
Only if you believed government wanted crypto to succeed, yes?
For me that drastically increases the "potentially shady" factor.
Moneyed effort on a Linux replacement for the long term purpose of locking something back down.
I think in this case, FOSS would stand to gain more by not receiving money-laundered transactions which, as someone else pointed out in this discussion, would create a compliance nightmare.
To put it this way: would you accept 1,000 dollars from me if it would take you 100 hours of your life to receive?
> To put it this way: would you accept 1,000 dollars from me if it would take you 100 hours of your life to receive?
Does that really apply here? If this money can't be touched, then it's a minor time sink with zero benefit.
If there is a way to dump in 100 hours and extract the money, it's worth it because it's so much.
That analogy is more fitting to a 1 ETH donation.
Keep in mind that there is, as of right now, no evidence that this cash was "laundered" or in any way associated with any nefarious activity. It's merely anonymous.
This makes it sound like this happened in a vacuum, but those laws and regulations are in response to real world events and you have to consider that when talking about whether laws are unreasonable. For example, many people would have ethical objections to accepting a donation from an unknown source (what if the money was generated from some activity I object to?), don't want to deal with potential hassle if the source does something to trigger legal attention, or the risk of a non-zero chance of some unsavory sorts showing up and “suggesting” that you give them some fraction of it as clean cash, etc.
Allowing anonymous transactions means that the latter two kinds of events will happen on an somewhat regular basis, which is why most people accept laws requiring financial institutions to know their customers' identities as a necessary cost. If you say magic internet money is exempted from those requirements, well, there are going to be a whole bunch of surprisingly well-funded open source projects in Mexico paying salaries which make FAANG employees weep with envy.
What exactly makes an open source project so special that it should be exempt from the regulations that apply to everyone else?
And if that were the case, what would prevent an open source project from being just a smokescreen for something else? Obscure API implementations paying pseudonymous developers for PRs with anonymous donation money seems like a fine kind of laundering operation.
If that happens then you investigate, find out if it is a money laundering scheme, and bring a criminal prosecution if it is. You don't just assume they're guilty because the transaction was anonymous, or ban privacy tools and conduct mass surveillance on every transaction to make sure none of them are suspicious.
It's kinda wild how many people on HN suddenly become anti decentralization and pro mass surveillance whenever the topic of cryptocurrency comes up.
Fixed the amount for you. Yes, absolutely. I would spend 100 hours to receive the 350,000. That's 3500 per hour.
Assuming the money would be ethical and cleared by the government (two separate things), I too would absolutely take it. :P
Funny enough, even VB himself has 'Tainted' Eth in his wallet. He's used tornado cash on three different occassions.
No, the intent of the donation is to cause trouble to FOSS projects and waste their time. Not sure why you're appreciating this. It's like donating stolen property to the local orphanage.
Tornado Cash wasn't some haven for big money philanthropy pre-sanctions.
> Tornado Cash wasn't some haven for big money philanthropy pre-sanctions.
Vitalik used it to donate to Ukraine [0], and there are several other examples here [1] as well.
[0] https://forkast.news/vitalik-buterin-says-used-tornado-cash-...
[1] https://www.bloomberg.com/news/articles/2022-09-08/coinbase-...
Nobody was sending a half-million dollars to FOSS projects with it pre-sanctions.
Philanthropists use fiat, de facto. Anything else is notable.
> Tornado Cash wasn't some haven for big money philanthropy pre-sanctions.
Citation needed.
If I was a charity and got a suitcase full of dirty cash, I wouldn't necessarily be upset if I had to jump through hoops to make use of it.
https://twitter.com/jeremy_soller/status/1573386439941029888
https://news.ycombinator.com/item?id=32923693 - 119 comments
Source: https://etherscan.io/tx/0xca5bb04204f446f73a510ea02b2bd7c01e...
But if their leadership just want to make another piece of software by niche enthusiasts for other niche enthusiasts of some topic then that money is wasted on them.
A good example of where such money has become useful is Signal. Fulltime devs close more issues.
In such a scenario we try to enforce so KYC so much that we competely disregard the good that lack of KYC could do for us. What if this is drug money being used for actual good things? In some ways you couod say that the system is working: sometimes ignoring the law brings good to the society.
I am bringing here the same argument that would be used towards never prosecuting people for crimes that were discovered when someone has already reported a crime: i.e. if someone submits a DNA sample due to being raped can not be prosecuted for petty crime that was discovered due to it as that would make people in that situation do even more crime.
There is no such thing as "tainted" ETH. The ETH was transferred from address 0x4B6275DB08c61aeFBa7bADaaE93aa853e377CddB which is not a sanctioned address[0]. It is therefore fine to receive and spend that ETH.
It is possible that the donator violated US sanctions by taking it out of the Tornado Cash smart contract if: 1) they are a US person/under US jurisdiction 2) they are the same person that withdrew them from the Tornado Cash contract (not necessarily true).
Additionally, businesses which are not "money transmitters" (e.g. banks, crypto exchanges, etc.) are not subject to KYC regulations and are under no legal obligation to know the identity of their customers or donators.
Finally, I'd like to add that privacy-enhancing smart contracts like Tornado Cash have legitimate uses and were used for legitimate reasons, notably by Ethereum cofounder Vitalik Buterin who probably didn't like everyone observing and commenting on his Ethereum spending habits. I've seen a lot of "crypto critics" simultaneously criticize the transparency of blockchains and smart contracts like Tornado Cash which fix the problem...
[0] https://home.treasury.gov/policy-issues/financial-sanctions/...