They can track all funds that exit the mixer. They may not know how those funds got in the mixer but they can require all exchanges that have a legal presence under their jurisdication to reject any funds who's history originates from the mixer.
And yes, taken to an extreme it does indeed mean that every coin becomes inaccessible given enough time. Welcome to the real world consequences of interacting with systems that are counter to wider societies aims.
> Welcome to the real world consequences of interacting with systems that are counter to wider societies aims.
I don't think there's good evidence that this is counter to broader society's aims, just that it's counter to the power of the US state (which always wants its power to grow).
I'm quite sure what the outcome of a poll in the US and EU would be that asked:
Should it be legal to offer, or use, a service that masks the origin and destination of currency transactions from law enforcement who have obtained a proper court order.
Don't kid yourself, the tech/crypto crowd is not anywhere near average sentiment.
That’s just one frame on the question at hand, that tilts the poll in one direction.
The principle at hand here is if online transactions ought to have a floor on visibility by law enforcement higher than using cash. So there are other versions of the question that would get you different answers.
A mixer doesn't fit that definition. Even if they obtained a court order they may not be able to provide the information. You are moving the goal posts.
Some laws state things you must not do, and others state things you must do. Financial regulations tend to fall into the latter. Thus a service that cannot comply with these things is illegal.
It's not moving the goal posts. It's just the real world.
The people have voted that they would rather have KYC than criminal organizations operating at scale and foreign governments stealing from Americans. You may disagree, but your position is against that of society at large. You are perfectly free to exit society and transact only outside it.
There has never been a vote on KYC/AML policies and my research does not turn up any neutral sources suggesting the population strongly supports these rules.
In fact history shows that these rules are almost all dictated by a small group of people with little to no public input. Over a hundred years ago none of these laws existed and society survived. 100 years from now I doubt these concepts will be widespread and society will still function well.
Without these laws, the wealthy don't pay taxes, criminal organizations grow without bound, and foreign governments easily avoid sanctions. As money movement became easier, so governments couldn't stop that movement by issuing letters of marque, these laws became essential.
So basically these laws perpetuate the status quo while consolidating power in the more evil and violent organizations that dodge these sanctions while subjugating the privacy conscious.
These organizations follow the law and are therefore easily in our control. North Korea and large criminal organizations do not and are not. It makes no sense to say that some organizations are behaving badly, so we should give up trying to regulate all organizations.
If you're really trying to argue that, you should argue that tradfi banks should be unregulated. Then you can get your money-laundering done even more cheaply than inefficient decentralized protocols can manage.
>If you're really trying to argue that, you should argue that tradfi banks should be unregulated.
Precisely, I do think tradfi banks should be unregulated, with full knowledge that will enable more efficient "money laundering" for some (of course for many of the consolidated powers that be that suck up power when the small guys are blocked, it's no different at all)
>It makes no sense to say that some organizations are behaving badly, so we should give up trying to regulate all organizations.
Blocking all users of Tornado Cash because of some organizations that behave badly is exactly the kind of logic you're impugning with your statement here. We shouldn't give up on all Tornado Cash transactions because some are bad. You contradict yourself.
That's a strange interpretation of my words. TornadoCash allows DPRK to steal from Americans and use that money. We shouldn't throw our hands up in the air and say there is nothing we can do about it. We should instead prevent anybody from transacting with funds laundered through TornadoCash via regulation. This removes DPRK's profit and affects normal people by some amount approximating 0.
This won't remove DPRK's profit and the amount of additional suffering DPRK is going to feel is a lot closer to "zero" than the American who uses Tornado Cash to firewall their hot wallet from their cold wallet.
>If nobody will accept their laundered coins, how do they profit?
I don't think there's any evidence sanctioning Tornado Cash closes off laundering options for DPRK. Washing through privacy coins come to mind as an alternative. Very easy for DPRK's government mechanism to learn while being much more a hassle for the average American who barely has time after work/kids/training etc.
>That provides no benefit to society and causes plenty of harms. Working as intended.
Privacy definitely provides benefit to society, including not letting everyone know how much money you have to spend in your cold wallet every time you spend from your hot wallet. In fact I'd argue more violence could ensue if criminals could easily discover who had large cold wallets through lack of privacy, as many would choose to simply go on targetted knee-cap breaking operations until the key is given up.
> I don't think there's any evidence sanctioning Tornado Cash closes off laundering options for DPRK
Those other methods can be shut off too. That isn't an argument to leave known laundering options available.
> Privacy definitely provides benefit to society, including not letting everyone know how much money you have to spend in your cold wallet every time you spend from your hot wallet.
Don't use technologies that have no advantages and only disadvantages. When I spend with my credit card, the merchant doesn't know how much money I have, and my transaction goes through nearly instantly with negligible energy usage.
>Those other methods can be shut off too. That isn't an argument to leave known laundering options available.
But that wasn't the argument you made. Now you're moving the goal posts. Sanctioning Tornado cash doesn't remove DPRKs profits as you claimed. I also doubt all methods can be shut off, or that it makes sense to cut off all "US Persons" just because DPRK uses it the way we don't like.
>Don't use technologies that have no advantages and only disadvantages. When I spend with my credit card, the merchant doesn't know how much money I have, and my transaction goes through nearly instantly with negligible energy usage.
When I use my credit card to buy say metal bullion online, I'm charged a huge markup if I pay with credit card. There are times when I don't want to pay the credit card markup and things like cash aren't always easily usable online. I don't even like spending crypto but I've paid for bullion with crypto online merely because it happened to be the lowest fee option for me with fast clearing. You don't know that for everyone crypto always has no advantages in their options.
How is it not? TornadoCash is used for laundering DPRK's ill-gotten gains, so we sanction it. Now anything they sent through TornadoCash is not usable. If anything else is used to launder their gains, we should sanction that too.
> When I use my credit card to buy say metal bullion online, I'm charged a huge markup if I pay with credit card.
Bitcoin does not remove the reason (fraud risk) you are charged that markup. As soon as regulations apply, everything that causes that markup to exist also applies to Bitcoin. On top of that, you have Bitcoin's high transaction costs, and completely public transactions.
You stated we removed their profit by sanctioning Tornado Cash. For one I don't think you have evidence sanctioning Tornado Cash eliminates profits of North Korea. There's also quite a few other ways, and only by moving the goal posts of saying we also shut off all those other ways of gathering profits could they be shut off. Which of course is both arguably infeasible, and not what you said.
>On top of that, you have Bitcoin's high transaction costs, and completely public transactions.
I didn't pay with bitcoin, I paid with LTC where my transaction costs a penny, plus or minus a penny.
>Bitcoin does not remove the reason (fraud risk) you are charged that markup.
That's nice that credit card premiums include fraud protection, but I'm not interested in paying for that with this vendor. It is one I very much trust, and even though I may even benefit from fraud protection I prefer not to have it. The vendor and I am in mutual agreement that I agree to give up my crypto with little chance of recourse, and I trust they will provide me the product. Sure, they may not make good and I may not have any good recourse, but the vendor and I have consensually made that agreement together with our own benefits in mind. In this case no fraud protection is a great benefit for me personally as I don't pay premiums for a service I don't want.
> You stated we removed their profit by sanctioning Tornado Cash. For one I don't think you have evidence sanctioning Tornado Cash eliminates profits of North Korea
The profit from the crypto that they stole or received as ransom payment. I thought that was very clearly implied.
> I paid with LTC where my transaction costs a penny, plus or minus a penny
That addresses one of the two problems with paying with BTC, remaining worse than tradfi payments.
> That's nice that credit card premiums include fraud protection, but I'm not interested in paying for that with this vendor. It is one I very much trust,
That's nice that you trust the vendor, but fraud costs are about whether vendor trusts you. If you pay them in stolen goods, those will be seized, and the vendor will be out bullion plus transaction costs.
>The profit from the crypto that they stole or received as ransom payment. I thought that was very clearly implied.
Tornado Cash is not the only way to launder ransom payments, so wrong again.
>That addresses one of the two problems with paying with BTC, remaining worse than tradfi payments.
Worse for some conditions, and not for others.
>That's nice that you trust the vendor, but fraud costs are about whether vendor trusts you. If you pay them in stolen goods, those will be seized, and the vendor will be out bullion plus transaction costs.
The vendor chose to charge me a lower fee for crypto than for credit. Perhaps the vendor failed to charge the appropriate amount to cover their fraud risk, but nevertheless in the transaction I found crypto advantageous. If you think they're wrong, feel free to offer your consulting services to APMEX and your expertise on selling bullion.
>You are perfectly free to exit society and transact only outside it.
Except I'm not because it applies to 'US Persons' which for US citizens applies to them anywhere they are on earth or even on another planet. Also to not be a US citizen requires paying what is for many people a prohibitive exit tax of thousands of dollars to renounce. That is, you can exit society and still run afoul of the law.
US voters, at least, have voted in representatives at all levels of government based on campaigns centered around a “tough on drugs” message, especially during the crack cocaine moral panic of the early 90s. It’s not much of a stretch to say the people have voted for the war on drugs, even if those policies would not survive a referendum or plebiscite today.
And yes, taken to an extreme it does indeed mean that every coin becomes inaccessible given enough time. Welcome to the real world consequences of interacting with systems that are counter to wider societies aims.