Is there any valid reason outside money laundering for these mixers to exist?
The US Treasury Department is levying sanctions against Tornado Cash, a notorious cryptocurrency mixer that it says has been used by threat groups like ransomware gang Lazarus to launder stolen digital assets. According to the government agency, Tornado Cash has been used to launder more than $455 million stolen by the North …
Tuesday 9th August 2022 07:29 GMT lglethal
I was actually going to ask exactly the same question!
I've talked it through with my colleagues in the office and not a single one of us could come up with a legal legitimate reason for Tumblers.
Hiding the source of funds for Spies, etc. could be so much more easily done by just opening a new anonymous Wallet and transferring the funds from there. And that was the closest we could find for a legit reason why maybe you might use a Tumbler. But then the use of a Tumbler on the funds to be sent would be just as much of a red flag I would have thought, so even then it's not a real reason for their existence.
Anyone got something?
Tuesday 9th August 2022 07:41 GMT Anonymous Coward
It depends on whether you consider privacy from government investigation to be legitimate. I'm a cryptocurrency supporter and I'm against these services. I also believe that individuals have the right to communicate using strong encryption but I'm struggling to reconcile these views (I worry about falling into the 'nothing to hide, nothing to fear' trap).
Tuesday 9th August 2022 10:01 GMT lglethal
Privacy from Government investigation into our finances is already something we dont have. Not unless your a proponent of Tax Evasion.
We all have to declare how we earn our money, in order to pay our taxes. Even Prostitutes have to declare their earnings. Using a Tumbler service is not going to change the fact you need to declare the source of your income. Unless of course it's coming from an illegal source or you're trying to avoid paying taxes on it, in which case the Tumbler service might help you out, but again thats not a legitimate legal use case.
Tuesday 9th August 2022 13:02 GMT Anonymous Coward
I appreciate the effort but the concept of anonymous transactions isn't novel, only the medium. Barring serial number tracking, physical currency is anonymous (in terms of lacking a ledger) and, certainly, fungible stores of value (e.g. gold) are. This just takes it into cyberspace. You're using the same arguments that are currently being made against strong encryption, which presume that governments will always be just and fair.
Against that, my favourite feature of blockchain currencies is their ability to expose corruption and, properly implemented, their ability to place total control in the hands of their rightful owners (civil forfeiture, anyone?).
Tuesday 9th August 2022 14:04 GMT lglethal
Excuse me but No I am not making the same argument as used against strong encryption. I believe strongly in Strong Encryption. I also understand completely that there may be reasons why people may want certain transactions to remain anonymous (and for that cash remains king...)
But I still stand by the fact that I have not heard of a single legal and legitimate reason for people to be using a Tumbler Service. You also have not proferred one, so please enlighten us - when would a Tumbler ever be used by anyone for a legal legitimate purpose.
We all await your beneficient wisdom...
Tuesday 9th August 2022 14:42 GMT Anonymous Coward
A few examples:
-supporting groups that oppose oppressive government or religious extremists, if one lacks an appetite for being attacked by the opposed groups
-avoiding being targeted by criminals for extortion
-paying for services that, while legal, you might wish to remain private (e.g. abortions, sexual health services, counselling), for yourself or others
You may be able to do these with cash but, as with using Tumbler services (and mentioned elsewhere), merely withdrawing cash in large amounts can be the subject of scrutiny. Against this, as I mentioned before, it puts cryptocurrencies on a par with fiat and fungible wealth stores in facilitating corruption.
One could equally make the argument that there's no legitimate, legal reason why one would wish to have their communications secured from the government (i.e. having a back door in encryption) but I don't think that undermines the right to privacy. The inability to imagine legitimate uses does not render the subject illegitimate and arguing otherwise denies any limitations of imagination in the argument maker.
Tuesday 9th August 2022 14:59 GMT Graham Cobb
Maybe you haven't scrolled down to my comment yet... one example is a journalist paying a source for information to expose government misdeeds.
There are many other examples of cases where untraceable cash-like transactions are critical for the functioning of a supposed democracy. And all that is without considering the basic principle of the privacy of my day-to-day purchases from people who have no business to know.
Tumblers are not just for illegal transactions - many use them for perfectly legal privacy.
Monday 15th August 2022 10:54 GMT PyLETS
Financial anonymity not the same as data privacy
Messages containing money are not the same as other messages in relation to privacy law for tax reasons, and the responsibility we give governments to combat organised and international crime, which is the primary legitimation for governments to exist. Cash is an acceptable risk for governments, in the sense they get the seigniorage which is a form of tax, there is little alternative to this existing, and holdings of large amounts can be stopped and searched under warrant.
The complex way for governments to combat use of cryptocurrency for money laundering is to publish a real time database of tainted wallet addresses, to taint each wallet these pay into, and to treat every owner of a tainted wallet as a money laundering criminal accessory, with a fine of a multiple greater than one of the tainted part of their wallet. All the data needed is in the blockchain, combined with a record of criminal complaints received identifying offending wallet addresses.
The simple way is to close down all the cash for crypto exchanges as money laundering accessories.
The tax and money laundering issue isn't the same as whether governments can or should have the power to prevent use of or break into strong encryption other than at endpoints. That ship sailed long ago.
Tuesday 9th August 2022 08:29 GMT druck
Tuesday 9th August 2022 18:08 GMT doublelayer
This assumes that you can find the people you want to charge and that you can charge them legally. Finding people whose entire business model is accepting pseudonymous tokens and making them more anonymous isn't supposed to be easy if they're doing their jobs right. They're not going to tell you where they are, they take their profits in the currency they're laundering, and they may change ownership frequently as operators cash out.
If you do identify them, a given country may be unable to charge them. Usually, the rules of extradition allow a country to charge someone if a) they were inside that country when they committed a crime or b) their victim was inside that country (and people sometimes even argue against this one). If the criminals were in a third country and they didn't steal the money, only launder it, they might not be legally chargeable in the country where the victim of theft was. Finally, the criminals might be located in a country that won't agree to extradite them under any circumstances or charge them there, in which case you can hope they leave for one that will but if they don't or you don't notice when they do, your charges don't affect them at all.
Tuesday 9th August 2022 09:07 GMT Graham Cobb
It is a reasonable question to ask (although even if the answer is No it may be hard to stop them - but that is a different issue).
Society has had anonymous cash for a very long time. My view is that it is important for cash to exist, and to be anonymous, and it is particularly important nowadays as the balance of power between government and citizen has tipped so much towards the government with modern technology.
Many societies are corrupt, authoritarian, kleptocratic or undemocratic. Not just Russia and China but many more such as Myanmar, Saudi Arabia, Venezuela, Zimbabwe, Turkey. Even, under its current government, India.
So, I believe that it is important that anonymous cash, not tracked by government, exists. As more critical functions (such as a journalist paying an online source for information regarding crimes by the government) move to the digital world, that means anonymous digital cash as well. Bitcoin, etc are not anonymous - every transaction is public and is recorded forever.
So, I believe mixers need to exist. Authorities should focus on closing down the ones which handle very large amounts of money - but making sure that facilities still exist for mixing moderate amounts.
Tuesday 9th August 2022 11:35 GMT Potemkine!
Only cash is anonymous.
Authoritarian societies control the way their subjects use digital means, looking at any communication, if not directly spying any device. They would be able to see somebody accessing such a service, marking the person as suspicious and worth of being more tightly controlled. It's only in our 'free' countries that such systems can be accessed with few controls if any. I think these service are mostly used to launder money or to evade tax, are nefarious and more a threat than a good thing.
Tuesday 9th August 2022 07:33 GMT lglethal
I was thinking the same thing!
After a quick poll of the office, no one could come up with a legitmate legal reason why you would use a Tumbler Service.
The closest we got was that perhaps for the funding of Spies, etc. to hide where the money comes from, but even that's stupid. It would be much easier and more secure to create a new anonymous wallet, and transfer the funds from there. the use of a Tumbler Service on the funds being sent would probably act as a red flag in the first place. So you know it would be a dumb idea anyway.
Anyone got a legit reason for these services to exist? Apart from making their owners a little bit richer at the expense of regular crypto users (also known as Victims or Potential Victims!).
Tuesday 9th August 2022 18:17 GMT doublelayer
"It would be much easier and more secure to create a new anonymous wallet, and transfer the funds from there. the use of a Tumbler Service on the funds being sent would probably act as a red flag in the first place. So you know it would be a dumb idea anyway."
You may be unfamiliar with how wallets work. You can create any number of them, but how do you intend to get value into them? The only way to transfer value into a wallet is by sending it from another one. If you fund a new anonymous wallet from a known one, people can track that. So if you send your funds from a known wallet, where they currently are, through a chain of new ones you've just created, any analysis of the transfer activity can identify what you've done with a lot of clarity. You could make it a little better by using old anonymous wallets you stockpiled a while ago, but if they were inactive, it will still be obvious, and if they were active, it becomes easier to make other guesses as to who has them and what they're used for. I don't think you're going to fund spies with a Bitcoin-style cryptocurrency any time soon, but if you do, your suggested approach will be unlikely to work.
Tuesday 9th August 2022 12:27 GMT MrGreen
Privacy Should be Protected
Let’s first note that illegal crypto transfers were only 0.15% of all crypto transactions in 2021.
People use mixers for privacy as most blockchains are public. You wouldn’t want your bank transactions public so crypto is no different.
Governments are banging the terrorism drum because they want to control everything. Why do you think 50% of cash points have been removed? CBDC’s are being trialled by 105 countries so governments will be able to track everything you’ve purchased and all of your movements. They don’t want people moving to crypto as it offers privacy.