Person that has worked on the defensive side of Money Laundering here.
The Tornado Cash sanction has been fascinating to watch and my key takeaway has been that there are two camps: that TC is a Money Laundering service or a Privacy service. Both are talking past each other, when it can in fact be both. Each camp see the service as their primary concern and consider the other camp as an unintended secondary.
I am seeing a lot of bad takes. "Money laundering requires all three aspects" particularly irks me because you can just point to KYC regulations to disprove that.
"Code is just code" is another, but that is just because the code isn't why someone would be sanctioned or arrested. In the same way that The Pirate Bay was just code, its is how complicit they were in the offence that will get them.
Ultimately, the dichotomy feels like a problem unique to public blockchains, and will only be solved with a ZK L1 chain, whatever that looks like. The solution would require the blockchain equivalent of end-to-end encryption, one where intermediaries have zero knowledge but doesn't require co-mingling of dirty and clean money.
While I think money laundering is a more serious crime than piracy (at least the predicate offenses can be). Watch this play out like Megaupload, never ending legal issues for the first parties, and a technical solution like Mega.
The Tornado Cash sanction has been fascinating to watch and my key takeaway has been that there are two camps: that TC is a Money Laundering service or a Privacy service. Both are talking past each other, when it can in fact be both. Each camp see the service as their primary concern and consider the other camp as an unintended secondary.
I am seeing a lot of bad takes. "Money laundering requires all three aspects" particularly irks me because you can just point to KYC regulations to disprove that. "Code is just code" is another, but that is just because the code isn't why someone would be sanctioned or arrested. In the same way that The Pirate Bay was just code, its is how complicit they were in the offence that will get them.
Ultimately, the dichotomy feels like a problem unique to public blockchains, and will only be solved with a ZK L1 chain, whatever that looks like. The solution would require the blockchain equivalent of end-to-end encryption, one where intermediaries have zero knowledge but doesn't require co-mingling of dirty and clean money.
While I think money laundering is a more serious crime than piracy (at least the predicate offenses can be). Watch this play out like Megaupload, never ending legal issues for the first parties, and a technical solution like Mega.