Tornado cash founders charged with money laundering/sanctions violations

[bbc.reporter]

This is positive news, I reckon. This is not only am assurance that this nonprofit organization will have the funds to continue their work, however, this is also an assurance that it will have the support of the big names in the cryptospace. This is only the beginning. I speculate Toly of Solana, Brian Armstrong, CZ and the other founders will start donating also.



Ethereum co-founder Vitalik Buterin donated 320 ether — worth over $1 million — to crypto think tank Coin Center on Tuesday night, according to blockchain data.

Buterin’s donation came mere hours after a U.S. appeals court overturned U.S. sanctions against embattled crypto mixing service Tornado Cash, ruling that Tornado Cash’s smart contracts “are not the property of a foreign national or entity” and thus cannot be blocked under the International Emergency Economic Powers Act (IEEPA). By imposing sanctions on Tornado Cash, the Treasury Department’s Office of Foreign Asset Control (OFAC) “overstepped its congressionally defined authority,” the court ruled.

Read in full https://www.coindesk.com/policy/2024/11/27/vitalik-buterin-donated-1-m-in-ether-to-coin-center-hours-after-tornado-cash-victory

[NotATether]

This is positive news, I reckon. This is not only am assurance that this nonprofit organization will have the funds to continue their work, however, this is also an assurance that it will have the support of the big names in the cryptospace. This is only the beginning. I speculate Toly of Solana, Brian Armstrong, CZ and the other founders will start donating also.

Non-profits can make a huge buffer between crypto and regulation, because unlike the rest of us who operate outside of legal mandates (as far as organizations and open-source are concerned), these non-profits can actually put some sense into lawmakers, discouraging them from going after people who create crypto projects and instead treating them like normal entities.

[bbc.reporter]

@NotATether. It appears that there are already these people in the government who always have the good sense, however, they have not expressed themselves before hehehe. These 3 judges from the 5th circuit court have ruled that the department of treasury has overstepped their boundaries and they have said that the department of the grandma Yellen had no right to sanction Tornado Cash and I reckon it might also have no right to imprison the developers. We should be hopeful that this type of regulatory overreach will not anymore occur under the Trump administration.



Two days before the holiday, a unanimous three-judge panel of the Fifth Circuit ruled that the Treasury Department’s Office of Foreign Assets Control (OFAC) had acted in an arbitrary and capricious manner not supported by substantial evidence when it “overstepped its congressionally defined authority” in sanctioning “Tornado Cash’s open-source, self-executing software” instead of “the rogue persons and entities who abuse it.”

In plain English, Congress didn’t give OFAC the power to do what it did: sanction software code owned by no one.

Read in full https://www.coindesk.com/opinion/2024/12/06/ending-the-treasury-department-s-regulatory-overreach-on-crypto-mixer-tornado-cash

[bbc.reporter]

It appears that after reversing the judgement on sanctioning Tornado Cash all mixing will be back to onchain mixers similar to Tornado Cash and other onchain mixers?

This might begin to occur after 3 Russians will face moneylaundering charges for allegedly running centralized mixers. Were they operating these mixers and they were using them for their clients? On onchain mixers, the smart contracts are neutral for everyone to use.

In any case, I will only share first letter of the mixers' names. Everyone can read the article to know their names. They had popular signature campaigns on this forum.



Russian nationals have been charged with crimes for allegedly running the crypto mixing services B and S used by North Korean hackers.

Read in full https://www.coindesk.com/policy/2025/01/10/three-russians-face-money-laundering-charges-over-mixing-services-doj

[examplens]

In any case, I will only share first letter of the mixers' names. Everyone can read the article to know their names. They had popular signature campaigns on this forum.



Russian nationals have been charged with crimes for allegedly running the crypto mixing services B and S used by North Korean hackers.

Read in full https://www.coindesk.com/policy/2025/01/10/three-russians-face-money-laundering-charges-over-mixing-services-doj

You can say their name, Blender and Sinbad, it's not a virus so we'll get infected.  
Blender was turned off 2.5 years ago, but authorities haven't given up on the search for its creator. It is quite possible that these three people were connected with the aforementioned Korean group, it cannot be a coincidence that they always used their mixers.

[Synchronice]

It appears that after reversing the judgement on sanctioning Tornado Cash all mixing will be back to onchain mixers similar to Tornado Cash and other onchain mixers?

This might begin to occur after 3 Russians will face moneylaundering charges for allegedly running centralized mixers. Were they operating these mixers and they were using them for their clients? On onchain mixers, the smart contracts are neutral for everyone to use.

In any case, I will only share first letter of the mixers' names. Everyone can read the article to know their names. They had popular signature campaigns on this forum.



Russian nationals have been charged with crimes for allegedly running the crypto mixing services B and S used by North Korean hackers.

Read in full https://www.coindesk.com/policy/2025/01/10/three-russians-face-money-laundering-charges-over-mixing-services-doj

If Coindesk can mention them, then, believe me, you can mention them here too.
Overall, this business seems very strange, you need thousands of Bitcoin to be able to start a mixer (in the first case, if you have thousands of Bitcoins, why the hell do you try to start a business where the risk of getting caught and spending the rest of your life in jail is very high). Isn't it better to invest that amount of money in legal business? The income can be as good as in case of mixers or just spend the rest of your life on Ibiza.

You can say their name, Blender and Sinbad, it's not a virus so we'll get infected.  
Blender was turned off 2.5 years ago, but authorities haven't given up on the search for its creator. It is quite possible that these three people were connected with the aforementioned Korean group, it cannot be a coincidence that they always used their mixers.

If Lazarus is their client, then why do they need to promote their mixer on different websites?
By the way, it's very interesting how they caught its creators, where did the creators made a mistake. I've read some articles about arrests of internet business owners and they were quite interesting. For example, the arrest of the owner of kickass torrents is quite based on a simple mistake

[examplens]

If Lazarus is their client, then why do they need to promote their mixer on different websites?

It is always good to have innocent neutral customers in the whole process, those who will create additional "noise".

By the way, it's very interesting how they caught its creators, where did the creators made a mistake. I've read some articles about arrests of internet business owners and they were quite interesting.

It's always about small mistakes.
If I remember correctly, I think that at some point the owner of CM paid something with PayPal, where he was doxed among other things

[dkbit98]

It appears that after reversing the judgement on sanctioning Tornado Cash all mixing will be back to onchain mixers similar to Tornado Cash and other onchain mixers?

I don't understand what you wanted to say here.
All mixing for bitcoin is done on-chain, that includes centralized and decentralized stuff like coinjoin and joinmarket.
Only way for some kind of off-chain mixing using some bitcoin second layer or sidechain.

Russian nationals have been charged with crimes for allegedly running the crypto mixing services B and S used by North Korean hackers.

I heard about this news last week, but I find no connection with Tornado cash case.

[NotATether]

Overall, this business seems very strange, you need thousands of Bitcoin to be able to start a mixer (in the first case, if you have thousands of Bitcoins, why the hell do you try to start a business where the risk of getting caught and spending the rest of your life in jail is very high).

Because if you set up the mixer right then you can easily make dozens of BTC in passive income every year and start a legal business or spend the rest of your life on Ibizia.

Mixers tend to not care where their clients come from, as long as they get the money. This is what gets them in trouble most of the times because mixers cannot be regulated due to their design. Rarely is the mixer actually a front created by North Korean bad actors.

[Synchronice]

It is always good to have innocent neutral customers in the whole process, those who will create additional "noise".

Either franky1 or Kruw (I don't remember which one, my apologies) said something about mixers and innocent customers, which was very interesting, I'll share a short notice that I remembered from this post. So, one of them said that Bitcoin mixers falsely advertise privacy and tell people that they need privacy because they want to get clean coins from innocent customers, which later will be used by criminals and during mixing process, basically innocent customers receive dirty coins and dirty customers receive clean coins.
I don't agree or disagree with this statement at the moment because I haven't spent lots of time thinking about this but it's quite interesting to my mind.

By the way, it's very interesting how they caught its creators, where did the creators made a mistake. I've read some articles about arrests of internet business owners and they were quite interesting.

It's always about small mistakes.
If I remember correctly, I think that at some point the owner of CM paid something with PayPal, where he was doxed among other things

Yes, it's always about small mistakes and it's kinda funny how small and tiny, but in reality, very important they are. To be honest, I really wonder how the owner of Chipmixer had so many Bitcoins. If I remember correctly, the owner was a 50 years old ordinary guy. Despite the fact that prize was low, he should have been a millionaire before creating it.

[OmegaStarScream]

This just came in:

Texas District Court reverses Tornado Cash sanctions: https://cointelegraph.com/news/us-texas-court-reverses-tornado-cash-sanctions-crypto-privacy-win

[BenCodie]

This just came in:

Texas District Court reverses Tornado Cash sanctions: https://cointelegraph.com/news/us-texas-court-reverses-tornado-cash-sanctions-crypto-privacy-win

This is big news, and could lead to a big shift on the subject of privacy in cryptocurrency from the US, as well as bring back innovation on the topic.

I'm hoping this doesn't lead to an irrational shift where the forum re-enables mixers without any requirement to evolve. Mixers like tornadocash are great because it's non-custodial and decentralized technology. Even after it was taken down, the contracts could be re-deployed and re-used. Truly decentralized. It didn't all fall a part following the takedown and legal issues. Mixers on bitcointalk have never been like this. They are almost always operated by anonymous players, and almost always have custody of their reserves, making them a huge risk to both users and in general.

Thanks for sharing this, this thread has been great for keeping up to date on the topic.

[hugeblack]

Even after it was taken down, the contracts could be re-deployed and re-used. Truly decentralized. It didn't all fall a part following the takedown and legal issues. Mixers on bitcointalk have never been like this. They are almost always operated by anonymous players, and almost always have custody of their reserves, making them a huge risk to both users and in general.

According to the article, this is apparently the reason:

“We hold that Tornado Cash’s immutable smart contracts (the lines of privacy-enabling software code) are not the “property” of a foreign national or entity, meaning (1) they cannot be blocked under IEEPA, and (2) OFAC overstepped its congressionally defined authority.”
The six plaintiffs also argued that blockchain transactions can be traceable, which is why some crypto users “want additional options to keep their transactions private.”

So smart contracts are not "owned" by a foreign citizen or entity. This ruling may be a future argument if Monero or any other decentralized privacy service is banned, but I don't think that will apply to mixers.
In any case, the money laundering charges were not dropped

[bitmover]

This just came in:

Texas District Court reverses Tornado Cash sanctions: https://cointelegraph.com/news/us-texas-court-reverses-tornado-cash-sanctions-crypto-privacy-win

This is big news, and could lead to a big shift on the subject of privacy in cryptocurrency from the US, as well as bring back innovation on the topic.

I'm hoping this doesn't lead to an irrational shift where the forum re-enables mixers without any requirement to evolve. Mixers like tornadocash are great because it's non-custodial and decentralized technology. Even after it was taken down, the contracts could be re-deployed and re-used. Truly decentralized. It didn't all fall a part following the takedown and legal issues. Mixers on bitcointalk have never been like this. They are almost always operated by anonymous players, and almost always have custody of their reserves, making them a huge risk to both users and in general.

Thanks for sharing this, this thread has been great for keeping up to date on the topic.

Really big news!!!

This shows how a a more freedom biased President is important for regulations and even for judicial decisions...

I believe we will have a much more friendly environment for crypto currencies in the US in the future, and even some crypto millionaires and developers will move there looking for that security and stable environment .

[Russlenat]

So smart contracts are not "owned" by a foreign citizen or entity.

This is good news in a way because developers could create mixers that are decentralized and anonymous, just like Satoshi. Since there’s no owner, no one can be charged, and the only ones who could face charges for money laundering would be the users. This setup provides freedom for everyone because even if someone is charged, the platform would continue to operate.

But is it possible for such a system to avoid linking transactions between launderers and non-launderers?

[dkbit98]

Texas District Court reverses Tornado Cash sanctions: https://cointelegraph.com/news/us-texas-court-reverses-tornado-cash-sanctions-crypto-privacy-win

This is important win for privacy, now they just need to released arrested developers from prison.
I never really used tornado cash, but this case can encourage people to create more tools for bitcoin privacy, maybe even make protocol level improvements in that direction.
I am waiting to see more positive news after this news and release of Ross Ulbricht from prison.

[PX-Z]

This shows how a a more freedom biased President is important for regulations and even for judicial decisions...

I believe we will have a much more friendly environment for crypto currencies in the US in the future...

Right? I used to have doubts too, especially with all the discussions online (including here on the forum) about these topics. But now I’ve come to realize I underestimated the power and influence a president holds. The future environment will likely be more stable and favorable if the same party continues to lead in the U.S. presidency.

[NotATether]

This shows how a a more freedom biased President is important for regulations and even for judicial decisions...

I believe we will have a much more friendly environment for crypto currencies in the US in the future...

Right? I used to have doubts too, especially with all the discussions online (including here on the forum) about these topics. But now I’ve come to realize I underestimated the power and influence a president holds. The future environment will likely be more stable and favorable if the same party continues to lead in the U.S. presidency.

*For four more years.

After that it may stay the same, or it may revert back to crypto whip-lashing and maybe an operation chokepoint 3.0.

The thing is, American politics have become too extreme over the last 10 years or so. Maybe because nerves swelled over Trump entering politics. Either way, democrats have not been friendly to crypto at all (simply because Trump supports it) and we have seen the Biden administration try to do progressively worse things to crypto.

[bitmover]

The thing is, American politics have become too extreme over the last 10 years or so. Maybe because nerves swelled over Trump entering politics. Either way, democrats have not been friendly to crypto at all (simply because Trump supports it) and we have seen the Biden administration try to do progressively worse things to crypto.

I believe all over the world extremists are dominating politics. Many people say it is because of social media, which tends to propagate extremists and more radical content... These are the content which become viral.. I agree with that. Social media is making people become too radical in politics...

Either way, I believe we will a global right wing trend, specially in western world.

[arabspaceship123]

They're finding new space because of Trump & republicans but their future isn't certain. If democrats win the next election we don't know how they'll handle crypto policies. America on it's own shouldn't decide the fate of mixers.

The thing is, American politics have become too extreme over the last 10 years or so. Maybe because nerves swelled over Trump entering politics. Either way, democrats have not been friendly to crypto at all (simply because Trump supports it) and we have seen the Biden administration try to do progressively worse things to crypto.