Specifically - with this issue - I think it becomes easy to get "unsanctioned" - transfer a Federal Wallet the amount of crypto received from a sanctioned wallet - until then - the wallet remains on the banned list - and any wallet that interacts with it becomes banned, too.
You can build a graph and un-ban wallets when one of the banned wallets finally transfers the money to the Federal Wallet and becomes un-banned.
And more specifically - with the troll case - you can simply only ban wallets after a specific dollar amount from banned wallets has been transferred to it. Someone trolls you by sending you $10 of poisoned Eth? Who cares.
10,000,000 wallets troll you by sending you $9 of poisoned Eth? Suspicious...
Circle/USDC immediately blacklisted every sanctioned address.
Reality is USDC is so intertwined with Eth/Defi at this point that the Feds can effectively censor Eth through Circle.
So while I agree this demonstration is silly it’s more a distraction from the fact that the Feds can enforce censorship via this highly centralized US-based stablecoin which has become so central to defi activity across many major protocols
That's not trolling, that's trying to get other people to fight the US justice department for you. This "troll" probably has a lot riding on Tornado Cash. It's not the kind of stunt pulled by someone without interest.
If some rando decided to bring the Feds down on my head, I certainly would not be interested in fighting for their cause. I'd probably go "fuck you" and oppose whatever they wanted purely out of spite. If this is being done by an ideologue and not a troll, it's a pretty dumb one.
If a rando can bring the Feds down on my head without me doing anything, by only using public information about me, then I would be more frustrated by the "regulatory mess", this should not be possible. Basically:
> The gag effectively points out the absurdity of such sanctions for users receiving funds from blacklisted addresses that they have no power to decline.
It seems to me this highlights a flaw in the payment system - the inability to decline. Am I understanding that right? You really can’t refuse an ETH transfer?
You can if you put your money in a smart contract that refuses all transfers that haven't been pre-approved by you, although that's not the standard procedure.
This makes it more difficult but not impossible. The EVM has a SELFDESTRUCT opcode [1] that will send ETH at that address to a receiver and it's impossible for the receiver to refuse. A very determined actor could send Tornado ETH to a contract designed to self destruct upon receipt of the ETH and relay it to the intended receiver.
You can program your smart contract to forever deny the use of such funds by recording its "non-selfdestruct" balance in the state and only allow to withdraw up to that amount.
It's using an open letter you sent to everyone, including sanctioned entities, that you'll always accept their money.
That you've been bamboozled by ETH it's between you and ETH. I can imagine future crypto regulation will include requirements that users can decline receiving transactions
> then I would be more frustrated by the "regulatory mess"
That's not how regulation works. No man made law can make something actually impossible. It's there to define what you're allowed to do or not, and serves as a basis for the legal consequences. Enforcement can make things impossible. Some problems are solved with regulation but this is a technology (enforcement) problem.
Murder is unambiguously illegal and yet regulation can't make it impossible. You have no power to decline being shot.
they're sending 0.1 Ether, which simply means they deposited 0.1 Ether which is currently $170 each
also, when Tornado Cash's anonymity isn't the priority, you don't need to delay between a deposit and a withdrawal, so this person wouldn't have needed to have interest within Tornado Cash, they could have acquired Ether, deposited Ether into Tornado Cash and sent it out, all within 60 seconds of each other, especially with a bot
Tornado Cash has reportedly $400 million in it, 213,000 Ether. Someone with "a lot" of interest would have much more than 0.1 Ether deposits to troll with (because each denomination has a different pool, so someone using the 10 and 100 ether pool simply wouldn't bother with the 0.1 ether pool). Anyone can do this and there are alot of people willing to force the logical extremes of sanctioning a pool.
One thing I don't understand is that crypto and web3 are about taking back control, but anyone can drop anything in my wallet. Is that correct? It makes me anxious about participating because I can't control that.
Reminds me of the Venmo scam I encountered a month ago. Some person I don't know sent me $50, then tried to send me a request for $50, but accidentally sent me another $50. I'm confident this was a scam, so I sent a support request to Venmo and let them deal with it. It was pretty frustrating that I was never prompted to accept the funds. Is this standard practice with many of these "send money" applications?
It's correct for most blockchains, but not for Mimblewimble ones, as those require a joint signature by sender and receiver in order to construct a valid transaction (requiring a few rounds of interaction between them).
Performing an ACH will get your account picked up by the FinCEN and KYC dragnet.
These are in no way comparable.
I'm getting tired of these dishonest "crypto is the same" arguments. It's not even close.
Banking is well regulated and monitored. There are mechanisms to protect people, rout out bad actors, and legal means to reverse transactions. Crypto is a "code is law" wild west, full of sharp edges and irreversible hacks and scams.
The correct comparison is "anyone can drop cash (or anything else) in your backpack" and yes, this does make me nervous especially when I'm traveling internationally. Also, it's harder to drop cash in your bag than it is to sign a crypto transaction.
I would suggest to you that you need to think of this in a different way.
There are mechanism and then there are legalities.
You may receive a transaction and you have a mechanism to reverse the transaction, but now your account is tagged as the sender is a known tracked account. You have just interacted with a known drug dealer, terrorist, enemy of state etc and you are now by association suspected of wrong doing. Reverse the transaction, your account is still a data point in some database.
Send money to the wrong account, and yes you may stand a high chance of getting it back but you may not.
The situation does differ when it comes to hacks though.
There are legal means to force the recipient to send back erroneously sent funds in bank payment systems, the transactions themselves are generally non-reversible (some banks learnt that the hard way after accidentally sending money to Lehman Brothers after their collapse). The same rules apply to blockchains too, and people have successfully demanded refunds where the other party was known. It seems that the reason you're seeing a tiring amount of seemingly false claims is that your own information set isn't exactly correct.
> There are legal means to force the recipient to send back erroneously sent funds in bank payment systems, the transactions themselves are generally non-reversible (some banks learnt that the hard way after accidentally sending money to Lehman Brothers after their collapse).
This is not evidence to the contrary. In fact, this bolsters my claim.
> The same rules apply to blockchains too, and people have successfully demanded refunds where the other party was known.
When the parties are known actors in jurisdictions you can reach. Crypto is a Wild West of anonymity, deception, rug pulling, scams, and hacks. It's constantly in the media for how often people are screwed by these systems. We wouldn't see frequent pleas for reversals if the system itself could actually restore victims.
Banks are incredibly well regulated. You can't even start a bank without permission from the state, and applying for permits requires that you meet a multitude of criteria and have organizational and process maturity.
Don't pretend crypto resembles banking. It's a shitty pasquinade.
"Officials at KfW frantically attempted to stop the transaction once they realized what was happening, however, they were unable to get their money back."
Sending money to an entity that then declares bankruptcy before the transaction can be reversed doesn't is unfortunate, but it's not a counter-example at all - indeed, the fact that they tried to reverse it undermines your point that transactions aren't reversible!
The same bank came under fire a few years later for sending about $5.4bn to four banks by mistake, however they were able to recover all of that because they hadn't done that literally hours before the recipients went bankrupt.
that they tried and failed is not evidence for transactions being reversible at the technical level, that's an extremely misleading interpretation on your part. we could build interbank payment systems with reversibility built in, but the matter of fact is that for the most part we haven't. payments in TARGET2 or equivalent systems are final.
what guarantees reversibility is the legal system, from which crypto is definitely not exempt, contrary to what some people (including you) seem to believe. enforceability is a different question, but if you don't have a billion-dollar balance sheet like these institutions, you'll find that it's impractical for many fiat transactions too.
think about it: when you sent some money in accident, who do you contact? the bank (which could simply revert the transaction if it was reversible), or the recipient (who will initiate a new transaction if they're acting in good faith)?
Maybe you can also ask how Santander 'Santa' Bank are doing after accidentally transferring or gifting £130M into people's accounts which they are still struggling to recover as the transfer is irreversible. [0]
Maybe those affected have already spent their Christmas present from 'Santa'.
The following scenario is unlikely with my regular banking account:
A ransomware victim accidentally transfers 10 million dollars in Bitcoin to my account and the next day the ransomware actors show up armed and dangerous to my house demanding that I transfer it to their bank account
My policy is to never assume I am anonymous on the internet because I am not a security expert. From what I read, most people can be found. I'm basing this on the clever way they found Dread Pirate Roberts.
AFAIK, he wasn't found on the basis of his home address being figured out from his Bitcoin wallet. Could a determined state level actor hell-bent on tracking you down accomplish it, based just on a BTC wallet address? Dubious, but never say never. Could anybody short of a three letter agency do it? I don't think so.
It's a highly unlikely scenario, especially since the namespace for all possible BTC wallets is ridiculously huge, and only the very tiniest of addresses have been used. Besides, the scenario you've raised is much more likely to happen with traditional bank accounts, and which are explicitly linked to your home address.
and you're assuming quite a few other things too, can you elaborate on the following part about someone showing up at your house? and can you elaborate on the part about ransomware hackers?
it reads like you put half a decade's worth of clickbait headlines and comments together and haven't used bitcoin at all, but since its 2022 that doesnt make much sense in a technology forum so I thought I would check
How anxious does your bank account make you feel in that regard? It's the same there. I actually can't think of examples of payment systems that have refusability built in. In fact, you can be interest if your bank accidentally sends you money (there was a case in Germany I believe, can't find it right now).
I'm not concerned because there's an audit trail for money deposited in my bank account. Money can't just fall out of the anonymous cloud into my bank account leaving me to explain where it came from
Not necessarily. If you were a bank using ethereum as a backend you would track how much of the stained fund was received and leave it there to never use it.
How are addresses linked to celebrities know about and confirmed? e.g. Jimmy Fallon and Dave Chappelle? Unless the address is made public and linked to the person.
Don't know about Chappelle, but Fallon has his ethereum name service (ENS) address "Fallon.eth" in the "Name" field of his verified twitter account profile.
Ethereum is pseudonymous. Society should be used to pseudonymity by now, it's only been decades since everyone had accounts on everything. It's honestly astonishing how badly people are confused about online identity.
(Side remark: Some crypto are in fact actually anonymous. The canonical example is Monero, where sending/receiving addresses, transaction amounts, and address balances are all obfuscated.)
"As a simple police matter. we can track the flow of bitcoin very easily. Imagine we created a law, one is not allowed to interact with any "blacklisted/tainted" account/wallet and any account/wallet that interacts with a blacklisted/tainted account/walletn after its been marked as blacklisted/tainted is automatically blacklisted/tainted itself (easy to determine in bitcoin). I'd hazard to say, that such a policy would have a quick impact on bitcoin's valuation.
now, at first glance, this type of law might seem reasonable - if an account has been marked as doing illegal actions, any account that interacts with it is benefiting from said illegal actions.
However, this would setup a world of griefers. In bitcoin (I believe) you don't really have the ability to accept or reject transfers. if someone transfers coins to my wallet's address, it will be mine. Imagine someone who gains access to a blacklisted wallet and just transfers tiny amounts to all the addresses that contain massive sums of bitcoin, thereby tainting it all. "
BTW, is there any wallets known to be owned by government agencies?