Clinamenic

θερμοδυναμικός καπιταλιστής
Right now OFAC has essentially sanctioned the various Ethereum addresses constituting Tornado Cash, some of which may be entities/people, some of which may be smart contracts. They're both just hexadecimals.
 

Clinamenic

θερμοδυναμικός καπιταλιστής
And in the case of blockchain, these sanctions are very interesting. Someone just gave an example of if you receive a check from a suspicious actor, or a "Specially Designated National", you'd have to choose to deposit it, IE you don't just automatically receive it. In the case of blockchain, anyone can just send any wallet address (or smart contract address) funds. Maybe there are fiat examples of this as well, and I'm not aware of them.
 

Clinamenic

θερμοδυναμικός καπιταλιστής
Right now OFAC has essentially sanctioned the various Ethereum addresses constituting Tornado Cash, some of which may be entities/people, some of which may be smart contracts. They're both just hexadecimals.
So it stands to reason that, if one of the sanctioned addresses sends me some ETH, I'd be culpable as well, even without giving consent to receive funds, or even knowing who sent them. Unless OFAC has explicitly mentioned otherwise, and I'm just not aware of it.
 

Clinamenic

θερμοδυναμικός καπιταλιστής
That could be an interesting guerilla tactic for on-chain sanctioned actors: just spread the plague by sending funds to influential addresses. Assuming this possibility isn't precluded by certain clauses or conditionals stated somewhere, it is arguably a testament to the hamfistedness of this approach.
 

Clinamenic

θερμοδυναμικός καπιταλιστής
That could be an interesting guerilla tactic for on-chain sanctioned actors: just spread the plague by sending funds to influential addresses. Assuming this possibility isn't precluded by certain clauses or conditionals stated somewhere, it is arguably a testament to the hamfistedness of this approach.
:ROFLMAO: Someone literally did this!

 

vimothy

yurp
I could be wrong, but I'm pretty sure it inherits its permissionless/decentralized security model from the underlying network, IE Ethereum. If thats the case, OFAC would need to work with other executive agencies to compromise Ethereum itself, which is global.

But then again, maybe there are certain admin controls over the smart contracts deployed that regulators could seize, but even then, because all smart contracts are open source, someone else could just redeploy Tornado (IE they could "fork" tornado).
so the direct rails are to ethereum? ethereum is therefore a kind of obfuscatory asset into which I can "launder" my illegal gains. but this just moves the regulatory focus to ethereum directly. or wherever. the point is that eventually you need to move your money out of crypto and into the mainstream fin sector, at which point it becomes easy (relatively at least) to track and shut down. no crypto is an island.
 

Clinamenic

θερμοδυναμικός καπιταλιστής
so the direct rails are to ethereum? ethereum is therefore a kind of obfuscatory asset into which I can "launder" my illegal gains. but this just moves the regulatory focus to ethereum directly. or wherever. the point is that eventually you need to move your money out of crypto and into the mainstream fin sector, at which point it becomes easy (relatively at least) to track and shut down. no crypto is an island.
Yeah and thats one of the arguments for how crypto assets can be regulated: at the fiat onramps and offramps.
 

Clinamenic

θερμοδυναμικός καπιταλιστής
crypto could in fact be completely strangled by this strategy
What could be strangled, or rather put to rest, is this somewhat facile notion that the crypto economy could exist independently of the larger geoeconomic context.
 

Clinamenic

θερμοδυναμικός καπιταλιστής
Personally I don't quite see how the crypto markets could have ever persisted without mirroring the larger financial markets. Seems the bulk of it is speculative sentiment, and it's not like the speculators of the crypto market live on a different planet than those of the broader financial markets.
 

Clinamenic

θερμοδυναμικός καπιταλιστής
so the direct rails are to ethereum? ethereum is therefore a kind of obfuscatory asset into which I can "launder" my illegal gains. but this just moves the regulatory focus to ethereum directly. or wherever. the point is that eventually you need to move your money out of crypto and into the mainstream fin sector, at which point it becomes easy (relatively at least) to track and shut down. no crypto is an island.
Have you heard of the term metacrisis? It describes a sort of holistic risk profile we face as a species, and the theory involves two societal attractors: catastrophe and dystopia.

The theory goes as follows: a status quo of exponential economic growth within the constraints of limited resources necessitates rapid technological innovation, which occasionally results in paradigm shifts that place unprecedented levels of power (in absolute terms) in the hands of average people. EG hacking, or deploying code like Tornado Cash on a permissionless virtual machine like Ethereum. The theory frames this as being one attractor: decentralization of powerful capabilities which can (at least threaten to) destabilize society, AKA catastrophe or meltdown.

The other attractor is dystopia, regarding how our solutions to preventing/dissuading these threats of destabilization tend to involve centralizing some enforcement authority in a central power, thus opening the window for corruption and dystopian control society.

It's as if Ethereum was made with a priority of preventing dystopian outcomes, at some cost of increasing the potential for catastrophic outcomes, so to speak. IE by virtue of being permissionless, it is intentionally difficult to censor anyone, unless the criteria for censor-worthiness can be programmed into the infrastructure in a sufficiently decentralized fashion.

Anyway, the term metacrisis describes our situation between the Scylla of a dystopian control society, and the Charybdis of a catastrophic meltdown brought on by "coordination failure"
 

vimothy

yurp
What could be strangled, or rather put to rest, is this somewhat facile notion that the crypto economy could exist independently of the larger geoeconomic context.
but isnt this notion one of the prime motivating factors behind the creation of crypto - the idea that we can build a financial system which is completely independent of the one that exists currently?
 

Clinamenic

θερμοδυναμικός καπιταλιστής
but isnt this notion one of the prime motivating factors behind the creation of crypto - the idea that we can build a financial system which is completely independent of the one that exists currently?
That may have been part of Satoshi's vision (still haven't read his whitepaper haha), but to me it is pretty untenable. But to be clear, I think that is just one take on what this tech can amount to, and my understanding is that his whitepaper didn't account for smart contracts and non-fungible tokens, both of which are major primitives in this whole conversation.
 

Clinamenic

θερμοδυναμικός καπιταλιστής
but isnt this notion one of the prime motivating factors behind the creation of crypto - the idea that we can build a financial system which is completely independent of the one that exists currently?
I think a more realistic motivation is to build a system that is more difficult to censor than the existing one - a condition which almost necessarily leads us to situations like this tornado cash one.

And I think this motivation has - so far - been achieved. I don't see OFAC's authority extending much beyond this sanction, unless they consider it financially worthwhile to acquire a portion of the Ethereum validator network, and start steering the network itself.
 

Clinamenic

θερμοδυναμικός καπιταλιστής
Haha I always forget how much of this is lost on the lay audience, but this shit could be massively consequential for the future of the digital world.
 

Clinamenic

θερμοδυναμικός καπιταλιστής
I don't see OFAC's authority extending much beyond this sanction, unless they consider it financially worthwhile to acquire a portion of the Ethereum validator network, and start steering the network itself.
That said, I highly doubt they have statutory authority to do something like this - but I don't know.
 

william_kent

Well-known member
Yeah and in this case it's interesting because Tornado Cash may be difficult (or virtually impossible) to shut down, seeing as its just smart contracts on a permissionless distributed virtual machine.

yesterday Github, owned by Micro$oft, banned all the accounts of anyone who contributed to the Tornado repository, as well as removing that code repository - if the code can't be maintained then surely over time it will become deprecated and essentially useless?

To be honest I'm very surprised that the developers were using a centralised version control system owned by a massive corporation...incredibly bad opSec
 

Clinamenic

θερμοδυναμικός καπιταλιστής
yesterday Github, owned by Micro$oft, banned all the accounts of anyone who contributed to the Tornado repository, as well as removing that code repository - if the code can't be maintained then surely over time it will become deprecated and essentially useless?

To be honest I'm very surprised that the developers were using a centralised version control system owned by a massive corporation...incredibly bad opSec
Yeah I heard about that too, and honestly I don't know if there is a web3 version of github. In principle it could be done on something like IPFS or maybe Ceramic. I'd imagine there are efforts in this direction, but I just don't know of them.
 
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