Monday, August 15, 2022

Storm Chasers - Doomberg

Not satisfied with freezing funds donated using traditional fiat currency, the Trudeau government also sanctioned dozens of cryptocurrency wallets. Here’s how CoinDesk described it (emphasis added throughout):

The Ontario Provincial Police and Royal Canadian Mounted Police ordered all regulated financial firms to cease facilitating any transactions from 34 crypto wallets tied to funding trucker-led protests in the country.

The federal police agencies, working with the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC), are investigating cryptocurrency donations supporting the weeks-long protest against Canada’s vaccine mandate. The protests are now deemed illegal under the Emergencies Act invoked by Canadian Prime Minister Justin Trudeau for the first time since the law was passed in 1988.

Imagine a US citizen – having witnessed what transpired in Canada and being acutely aware of the hyperpolarization of US politics – decides she would like to make a donation to a liberal cause she supports. Wary of the potential for Donald Trump to return to the White House, she is determined to donate in a discreet manner. The organization she wants to support accepts cryptocurrencies, but she is hesitant to use her main wallet because it holds the bulk of her holdings, and losing access to those assets would be financially devastating. Blockchains might be pseudonymous, but they certainly aren’t fully anonymous. What are her options?

Enter crypto mixers, cleverly designed decentralized protocols for making transactions on the blockchain more private. In this example, our concerned citizen could send $500 worth of crypto to a mixer in return for a randomized key known only to her. She could then separately create a new wallet, send her unique key to the mixer from it, and receive her crypto back. Armed with this “clean” crypto – unassociated with her other assets and much more difficult to tie to her identity – she comfortably makes her donation.  The authorities would be able to see that she sent $500 worth of crypto to a mixer, but it would be almost impossible to discover what she did with it.

Of course, there is a fine line between the legitimate need for privacy in financial transactions and criminal money laundering, and crypto mixers cannot distinguish between the two. This makes them particularly popular among criminal money launderers. Last week, the US Department of Treasury hit back hard:

The Treasury Department has banned all Americans from using decentralized crypto-mixing service Tornado Cash.

The Office of Foreign Assets Control (OFAC), a watchdog agency tasked with preventing sanctions violations, on Monday added Tornado Cash to its Specially Designated Nationals list, a running tally of blacklisted people, entities and cryptocurrency addresses. As a result, all U.S. persons and entities are prohibited from interacting with Tornado Cash or any of the Ethereum wallet addresses tied to the protocol. Those who do may face criminal penalties.

via doomberg.substack.com

Bad bad bad.

https://rightcoast.typepad.com/rightcoast/2022/08/storm-chasers-doomberg.html

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Comments

Crypto? Would it be wiser just to bury some gold in your back garden?

Posted by: dearieme | Aug 15, 2022 1:37:41 PM

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