Basically, the "sanction preventions" Aave is instituting are for show only, in hopes they fool the regulators. They'll annoy and disturb the casual crypto trader but will do nothing to stop the big criminals from money laundering. I hope the developers of these defi lending protocols get hit with the criminal charges next.
When the "artists" have been openly and shamelessly stating, since around 2009, that the entire purpose of their "art" is to aid in laundering money and other crimes? Yes, absolutely.
If they're smart, they wouldn't admit to it publicly. But do you not remember the early history of Bitcoin, and the Silk Road? Nothing's changed since then, except some people got arrested and some haven't yet.
Less of this, please. Obviously, not everyone into crypto and defi says those exact words. But there are enough saying that type of thing, where I think it's wrong of anyone involved with this to feign ignorance. They know what they're getting into.
I really don't think you want to continue the discussion in the direction of "what's wrong crime A and crime B", that'll get off the rails very quickly.
Transactions and storage of money. You could also argue that artists who sell their artworks for huge sums of money are associating themselves to money laundering.
Transactions and storage of money are already decentralized, through the traditional finance system that connects at least thousands of banks and payment processors and other financial institutions. So it can't be that.
>You could also argue that artists who sell their artworks for huge sums of money are associating themselves to money laundering.
Yes, that's why transactions for those huge sums are subject to AML laws.
>That's not the case for every country on the planet
It's not helping there either. Countries where the economy is strictly controlled by the government, like North Korea, are mainly using crypto and defi to centralize even more. Their government can use defi to steal from other countries with impunity, evading international laws while continuing to oppress their own citizens and disallowing them from using the internet.
>And how do those prevent rich person A from paying rich person B (by buying a painting owned by B for an inflated price) for some illegal service?
If it were done through a bank (or a law-abiding crypto exchange) they would be required to keep a log of the transaction and the legal identities of the participants, as well as a log of where the money came from and where it's going. The idea is, if buying the painting is just one of the steps to "clean" the money, they'll be able to trace it back to when the money was dirty.
People in Lebanon are not being allowed to withdraw their money from banks, something similar happened in Greece a few years ago. With crypto if you have your own keys that's not an issue.
I don't see how the North Korea thing is an issue. I'm not sure what hacks you're referring to but when it comes to smart contracts code is law and the people who use them know that, if you can't get back the tokens you sent to a smart contract it's only your fault for not understanding how the software works. I don't think North Korea should exist in the first place but I don't think the act of getting money from a smart contract is immoral.
As for using works of art to launder money, I meant something like rich person A offers child prostitutes (or any other illegal service or item) to rich person B, who pays A by buying one of their paintings for a higher price than what A paid for it.
No, there are no other real applications for these mixers. The only reason you even need to do that on a public blockchain is because the design of them is so bad that there's no other practical way to have privacy without enabling large amounts of criminal activity. If you really care about privacy, and you don't like criminals, then just don't use any blockchains or cryptocurrency.
Sorry but I try to avoid dumping huge amounts of information on people in every comment, that often doesn't go down well either if you can imagine. If you want more I'll elaborate. There is no possible way you can deploy this service anywhere while effectively complying with AML laws. It isn't going to work. But it's also the only real effective way you can obscure the source of transactions on a blockchain that's forced to be public. There's no reason transactions need to be forced public in the first place, other than how blockchain designers insisted it was a fundamental design parameter, when you probably agree that it isn't and that some transactions should be private by default. The simple solution is to avoid all blockchains and cryptocurrency altogether. Yes, they are that bad. I wish it wasn't true and I could say something good about them, but I just can't after watching 13 years of bad things happen.
And no, things like monero and zcash aren't a working solution to this problem either, that's a whole different discussion though.
I mean, if you really think about it distributed public transaction ledgers were really primarily beneficial to those looking to actually understand more about where/how money flows. It's the classic problem of Networks. If there is enough information to ensure that something gets to one endpoint, and not others, that de facto becomes a tracking lever for surveillance and signal analysis. It's part of the package. There is no escaping it. As it giveth, so to does it take away.
Things like the Bank Secrecy Act are only there to guarantee a level of secrecy/protection from other customers. Law enforcement, government, and third party service providers are not counted there realistically. If you want financial privacy, you keep your own books. By that same token though, you don't get to act surprised when the authorities come a knocking with a warrant to crack open your books when they find out you made a poor decision of people to work/transact with.
Why is Monero not a solution either? As far as I know, it is not public which seems to be what you complain about, right?
Surely you accept that illegal trade happens through cash and even through banks, so you will agree that there is some level at which you cannot ban an entire system.
Are you making software that has the explicit stated purpose of facilitating illegal money laundering, like these crypto mixers openly say they do? If not, then you don't have anything to worry about from these sanctions.
Tornado Cash has never been for the "explicit stated purpose of facilitating illegal money laundering" but for being able to remain private about what transactions you make on the blockchain. As long as you file your taxes correctly, it wouldn't be illegal to use services like Tornado Cash.
Plenty of people use services like that to move funds from their cold wallet to their hot one, in order to not make visible to the public how much funds they have. Again, as long as you properly file taxes, this should not be a issue.
And yeah, some people do work on privacy-preserving services that can and will be used for bad purposes. Anything involving E2E encryption is usually made for privacy reasons, is this bad enough for you to say the same thing about it? What about things that can be used to skirt copyright like youtube-dl, do they deserve the same treatment?
> Tornado Cash has never been for the "explicit stated purpose of facilitating illegal money laundering" but for being able to remain private about what transactions you make on the blockchain.
Isn't that literally what money laundering is?
> As long as you file your taxes correctly, it wouldn't be illegal to use services like Tornado Cash.
IIRC, money laundering businesses pay their taxes too (e.g. the Breaking Bad car wash pretended the drug profits came from washing cars, and paid taxes those "car washing" profits).
No? "Money laundering is the process of concealing the origin of money, obtained from *illicit* activities such as drug trafficking, corruption, embezzlement or gambling, by converting it into a legitimate source." [1]
If the funds you're shielding via something like Tornado were legitimately earned by you, it's your right to do whatever you want to protect your privacy (as long as you report the proper tax paperwork to the government, otherwise it can turn into tax evasion).
This isn't warrantless surveillance, it's people breaking the law in the open. You can believe tornado cash should be legal but still, be realistic: Most OSS doesn't have tornado cash's risk profile
Yes, if your business engages in plainly illegal activity that relies on a letter of exemption from the relevant regulator, and if you don't abide by the terms of that letter, then the evil government might capriciously decide to shut you down.
Crypto isn't useful for that. The thing that's actually useful for that is the illegal, unregulated exchange that's making the trade. It doesn't matter what currency they trade it for, it could be anything else besides crypto tokens. Crypto actually just adds extra unnecessary steps because the end goal is almost always to get it back out in another local currency. Unless you plan to get the money and then only spend it on NFTs.
If you ask me, they should all be shut down for selling unregistered securities, because all crypto tokens fit closest to that definition more than anything else. It's impossible for these tokens to actually function as a currency, both technically and legally. They're not a new class of assets, the idea of tradable tokens is not new either.
Exactly my point. They are selling in fiat currency a lie. That 100% is accessible for litigation. The whole crypto->crypto thing could be seen as not a crime because who can tell it’s worth other than the darn fiat converter!
According to some crypto promoters I've seen on Twitter, blockchain is apparently the solution to everything and will revolutionize every industry. By their definition, you'd be hard up to find a company that isn't competing with them.
In actuality, the word "blockchain" usually refers to a specific type of distributed database based around a consensus layer on top of a merkle tree. Its usage competes (poorly) with other commercial distributed databases, not with Ethereum. And these "commercial blockchains" still failed to find a single effective use. All of them I've seen are just worse versions of other databases, and are either forks of some open source code, or are directly inspired by Bitcoin or Ethereum or another similar project.
>has a vested interest in the failure of open source crypto projects like Ethereum.
I also have a vested interest in the failure of projects like Bitcoin and Ethereum, and it's not because I'm invested in a competitor. It's because I don't like fraud and ponzi-style scams. And all crypto tokens are a variant of the same scam, because they inherently don't have any real value. All of them depend on the miners/validators pumping up the value so they can sell the block rewards and realize their profits. These tokens are all completely useless and valueless without a steady influx of new "investors" artificially inflating the price. Inherently they're just not like a stock, but the false idea of "crypto investing" is suggesting that they are.
You don't have to be invested in another product, to dislike scams and want them to go away.
>You're perfectly allowed to criticize your competitors
This author is far from being the only one to criticize blockchains. Lots of others shared the same conclusions: https://concerned.tech/
But for the average crypto investor who isn't a whale and isn't insider trading on the whales, the dynamics of the market are effectively just random. This isn't like a stock where you can objectively look at the company, compare it to other companies and understand how it derives profit. It can't work either as a currency or as a reliable investment.
I don't have time to listen to this podcast (I'll read a transcript if you have it) but just to respond to your comment: I've never seen the question of what happens after a society becomes "bottom-up crypto centric" get addressed. You have a country where the central bank is suddenly not doing anything, tax fraud is rampant, and the local currency is now further on the brink of collapse. All the citizens' money is effectively being funneled away into entities operating as foreign banks. The government is forced to accept crypto to avoid insolvency and now makes it so you have to pay your taxes in it. If they're still corrupt they'll force people to follow the same regressive restrictions again, and no one will be able to do anything about it because the blockchain is all public. How is this going to help anything? I'm trying not to be bleak here but the idea here seems to be disregarding any hope of reasonable reform.
I am a libertarian and I fundamentally believe the current central banking model is not only hopelessly corrupt but morally evil. Politicians have been able to steal from common people via inflation for a century while the rich are easily protected.
This is a long topic but to summarize I am quite hopeful that the ability for governments to extract wealth is limited greatly by the rise of crypto. If the government wants taxes they can do it by selling services to people who can pay for them if they agree it has value.
Of course I’m a minority but like all movements crypto is selling something to average people but the grand plan is only understood by a minority. Countries like Argentina have been basket cases for decades despite endless bailouts and IMF shenanigans. It’s time for something new that I believe is a valuable experiment with clear theoretic and ideological underpinnings that couldn’t possibly be worse than the socialist nightmare destroying billions of common people.
>I am quite hopeful that the ability for governments to extract wealth is limited greatly by the rise of crypto
I described a situation where this wouldn't happen though.
>If the government wants taxes they can do it by selling services to people who can pay for them if they agree it has value.
I'm sorry, this seems contradictory. I thought the possibility of this was already discarded when the idea of reform was thrown out. The assumption with the "bottom-up" idea seems to be that the government will always stay corrupt. If you take that approach then can't you see how this probably will end up like another failed bailout where nothing changes? Effectively all that's happening is more foreign money is being dumped into the system, except now it's just coming from offshore crypto speculators instead of from other governments. Try to look at this from a macro view.
Just my opinion: Crypto is pretty bad regardless of what your politics are. The ridiculous amount of fraud and scams in crypto, and other bad things like ransomware, are wrecking common people too. It can absolutely be worse. And, the theory and ideology of crypto doesn't actually stop a government from collecting taxes anyway.
Just my opinion: Central banking is pretty bad regardless of what your politics are. The ridiculous amount of inflation and corruption in central banking, and other bad things like telling society to stop using energy to "sAvE tHe PlaNeT" and be cold all winter (while I seriously doubt the rich politicians are keeping their thermostats low!), are wrecking common people too. It can absolutely be worse. And, the theory and ideology of central banking doesn't actually stop the individual from revolting anyway.
> I am a libertarian and I fundamentally believe the current central banking model is not only hopelessly corrupt but morally evil.
The problem is that your alternative has proven to be worse.
But also, lets assume that everyone in Argentinia is going to convert all of their currency into cryptocurrency.
What kind of repercussions is this going to have?
Well, for one, the currency in which people get paid is still the Argentinian one, not a cryptocurrency. Keep that one in mind, because its going to be affected by the rest.
What is going to happen next is massive tax fraud. People are not going to pay taxes over their belongings (you might agree with that as 'libertarian' but its going to hurt the government income for sure). This is going to result in a weaker government, and a weaker coin.
With a weaker government and a weaker coin, people get less value out of their currency. Remember that the people were paid in the national currency? Its worth less now. And also, what is going to happen when the government runs weaker? More crime, less public health, outsourcing to private entities, and defacto you will get something akin to some libertarian paradise where the top on the pyramid can actually survive and have opportunities, while the rest ends up on the bottom of cannon fodder.
With cryptocurrency, there's no such thing as accountability or paying your taxes. Such libertarian dreams are going to have the effect that the government becomes weakened and eventually you get that survival of the fittest in an unhealthy way. Without accountability and without taxes you'll get more corruption, not less. If you want an example of that, just look at Russia.
Meanwhile, all of these people are heavily dependent on? On what you think? Exchanges. Which, as proven by Mt. Gox, are not always going to be pure in their effort. So spare me the independence bullshit.
Centralized banking works, as long as there's accountability. You reach accountability by rule of law, by regulations. Cryptocurrencies try to avoid these, but neglects the reasons these were enacted in the first place. They're a massive step backwards in that regard.
>You're so against people hoarding, i.e. saving money?
The problem with this kind of system: It's not just about saving. What's actually happening is those who have saved more are accumulating even more money by doing nothing, and everyone else who needs to spend it to buy food and shelter is suddenly losing more and more of their money. When it starts happening at a faster rate than the economy is producing actual value then you hit hyperdeflation and the economy spirals.
That has nothing to do with bitcoin specifically though. What you're describing is either someone using another currency or using some kind of digital payment system. It doesn't have to be cryptos.
