This is just the beginning of an attack on privacy. We see that the USDC as centralized has to follow the sanction. BTC has the conjoin market, I don't know if they can do that on coinjoin?

I don't think they can do that against JoinMarket. But they could blacklist addresses that receive mixed coins (CoinJoin tx are very recognizable).

However, CoinSwap is being developed. This would be a way to unnoticeably swap your coins on-chain. CoinSwap tx would look just like regular tx.

I think we can use Lightning to escape the blacklist of on-chain addresses. We can open a chanel and send btc through lightning or send on-chain btc to muun wallet and send out through lightning. Since the lightning receiver will not know the origin of the btc so the blacklist will not work.

send out through lightning

In this case the provider will refuse to do submarine swap.

IMHO, Tornado Cash was sanctioned not because of its tumbling function per-se, but because hacking groups were using it massively to launder eth or eth tokens. And again that was because most hacks were/are made in ethereum and eth-like shitty vulnerable protocols or bridges. Not to mention all those lending website disasters.

On a side note, since most protocol-level developments in Bitcoin are decentralized and carefully made/reviewed, I don't see that many hacks happening on btc.

Sorry but sending your coins to a identified/public black hole has nothing related to privacy.

That is a huge flag that scream "ban me".

Financial privacy is not a crime.

Maintaining financial privacy by whatever means should be embraced, not prohibited.

Money was not meant as a means of control.

Imagine going to a public place and then mixing your gold with other people gold, and then the goverment saying that you ended with stoled gold, and that gold must be freezed.

How is that privacy?, Tornado cash as a privacy tool is dumb, what we need are tools that are indistingible from normal address, not a big " look we are laundering money here".

Here's an example of a public black hole: LN. Not quite reaching Monero levels of privacy, but way better than the chain. Does LN scream "ban me"?

Lightning network is a network while tornado is a centralized/public black hole.

Apples to apples.

You are looking at techniques to accomplish the same thing. One works poorly relative to the other, but the results are roughly similar. One is easily blocked the other is not. So as a technique, yes Tornado mixer is a worse approach.

My problem is not necessarily with a centralized mixer but with the regulations that make using a mixer a prohibited activity. But in the current environment, absolutely that Tornado mixer getting banned should not come as a surprise to anyone. We knew governments would fight back. And not only will this be the extent of it, I am pretty sure they haven't even yet begun to fight.

Tornado is not centralized, it's an unupgradeable smart contract. But the important part is that evil NK hackers laundered money through Tornado.

Now instead of using Tornado they will launder Bitcoin like this:

  • open a channel to a random LN node using dirty Bitcoin
  • rent inbound liquidity from someone with clean Bitcoin
  • pay through LN
  • close the channels

... and they're left with clean Bitcoin. Do you see now why LN might be the next target of sanctions?

And Fedimints are basically mini-Tornados with LN support.

You are spot on. This is happening right now.

The US Treasury has a Sanctions list? For tools?

What does this mean?

This means that exchanges now have the right to reject certain coins based on history. An attack on fungibility

Does is means that you can't scape regulations neither government.

I think it means no US citizen may use it now but dont quote me on that

Would actually be an interesting lawsuit because how can treasury arbitrarily decide which smart contracts Americans may or may not interact with

The list also tries to restrain every US citizen to prevent them from publishing text (i.e. transactions) that eth wallets interpret as a payment to tornado cash:

People who publish such text anyway (even in a format such as a physical book) are apparently in violation of OFAC and subject to prosecution. But in order to punish them OFAC has to examine the transaction they published (i.e. some text they wrote) and prosecute them for its contents. This is grounds for a lawsuit for violating the first amendment.

I guess celebs are about to learn a thing or two about keeping their addresses anonymous

This developed quickly....

  • Github account was suspended

  • @circlepay USDC blacklisted every #ETH address sanctioned

  • site is gone and the rest of the world are consequently banned from using it as well

Can wait to see what happens to "wrapped BTC", or as people would call it now, IOU BTC.

You don't need the website to use tornado cash though, the code is on eth's blockchain and can be used in transactions directly, without using the website. The website just automated the process of making a transaction that uses the tornado cash code.

Interesting 👀

Can the Sanctions List be used against Bitcoin or Lightning related tools/entities?

it already has been. several north korean Bitcoin addresses are on the sanctions list for example.

lightning though...havn't seen an example of that yet.