Blockchain Association, a nonprofit group dedicated to crypto advocacy, is filing a second amicus brief in support of the banned crypto mixer Tornado Cash. In a new announcement, the group says it is filing an amicus brief in favor of Coin Center’s lawsuit against the Office of Foreign Asset Control (OFAC), arguing that the regulatory […]
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A nonprofit organization dedicated to crypto advocacy is filing an amicus brief in support of the banned crypto mixer Tornado Cash. In a new announcement, the Blockchain Association says that it has filed an amicus brief in the Office of Foreign Assets Control’s (OFAC) lawsuit against Tornado Cash, saying that the token mixer is “simply […]
The post Blockchain Association Shows Support for Banned Tornado Cash in New Amicus Brief Filing appeared first on The Daily Hodl.
The attack on Latitude Financial is Australia’s biggest cyber attack with driver's license numbers, passports and financial documents among the stolen information.
The Australian government is being pushed to ban the payment of cyber ransoms, usually demanded in cryptocurrency, following a local business suffering a mass data breach and subsequent ransom demand.
Australian financial institution Latitude Financial first announced on March 16 that it was hit by a cyber attack and provided an update on April 11 indicating that it received a ransom demand that it's refusing to pay:
“In line with advice from cybercrime experts, Latitude strongly believes that paying a ransom will be detrimental to our customers and cause harm to the broader community by encouraging further criminal attacks.”
The attack resulted in around 7.9 million Australian and New Zealand driver's license numbers being stolen, in addition to 6.1 million customer records, 53,000 passport numbers, and 100 customer financial statements.
The Australian government’s lead cybersecurity agency, the Australian Cyber Security Centre (ACSC), currently recommends that victims of ransomware attacks never pay a ransom saying there’s no guarantee the information will be returned instead of being sold online.
Despite the recommendation, there is currently no law prohibiting firms from paying ransoms and the latest attack on Latitude prompted many from the Australian tech industry to call for new rules to outlaw it.
Wayne Tufek, the director of cybersecurity firm CyberRisk, noted in comments on April 11 to local media outlet The Australian that “making ransom payments illegal would act as a deterrent for criminals to continue attacks if they know that they won’t be paid large sums of money.”
The director of technology law firm Biztech Lawyers, Andrew Truswell, also told The Australian that a law restricting ransom payments should be considered.
Cyber Security Minister Clare O’Neil is currently weighing if ransom payments should be made illegal following suggestions from a review of Australia’s cybersecurity strategy led by Andy Penn, the former CEO of telco firm Telstra.
Cyber criminals cheat, lie and steal. Paying them only fuels the ransomware business model.
— Clare O'Neil MP (@ClareONeilMP) April 11, 2023
They commit to undertaking actions in return for payment, but so often re-victimise companies and individuals.
The ACSC suggests that Australia is particularly attractive to cybercriminals due to its prosperity, with Australians often cited as having the highest median wealth per adult in the world.
Cryptocurrency has long been accused of facilitating ransomware attacks, as attackers often demand payment in crypto in order to anonymize the funds and transfer them across borders.
One of the ways in which crypto facilitates ransomware is through its ability to anonymize funds through the use of mixing services such as Tornado Cash.
Related: Coinbase supports new court action to remove Tornado Cash ban
At a Feb. 28 United States Senate Banking Committee hearing a former deputy national security adviser for international economics in the Biden administration, Daleep Singh, suggested that “digital assets are essential to the business model of ransomware,” with “close to 100%” of cyber attackers paid off using crypto.
Hodler's Digest, April 2-8: BTC white paper hidden on macOS, Binance loses AUS license and DOGE news
Coinbase’s top lawyer says “powerful” legal arguments are being made during an important moment in the lawsuit to overturn a US ban on Tornado Cash. Paul Grewal, chief legal officer at top US exchange Coinbase, tells this 30,100 Twitter followers that he is optimistic plaintiffs will prevail in the lawsuit against the U.S. Treasury Department […]
The post Coinbase Lawyer Optimistic About Legal Challenge to US Tornado Cash Ban As Lawsuit Enters Critical Stretch appeared first on The Daily Hodl.
The motion is part of a broader effort to restore internet privacy rights for U.S. citizens.
The United States Treasury faces a renewed legal challenge that aims to overturn the decision to sanction the crypto mixer Tornado Cash from six individuals backed by cryptocurrency exchange Coinbase.
A motion for a partial summary judgment was filed on April 5 in a Texas District Court, the Coinbase-backed plaintiffs moved for the U.S. Office of Foreign Asset Control (OFAC) to settle for the first two counts from its original complaint filed in September 2022.
If granted, it would see the Judge rule on some of the factual issues while leaving others for the trial.
The counts claimed OFAC exceeded its statutory powers under the International Emergency Economic Powers Act (IEEPA) and violated the Free Speech clause under the U.S. Constitution’s First Amendment.
A few months ago, Coinbase backed a legal challenge to sanctions imposed by the US govt against Tornado Cash. Today the plaintiffs filed a motion for summary judgment, asking the court to reopen TC for all. Their arguments are simple but powerful. 1/10 https://t.co/xSngWKxM3x
— paulgrewal.eth (@iampaulgrewal) April 5, 2023
The plaintiffs firstly claimed OFAC breached a section of the IEEPA that allows the Treasury to take action against the property in which a foreign country or foreign national has an interest.
The motion argued that as the provision only allows the pursuit of property-related action against a foreign “national” or “person,” it doesn’t apply to open-source software.
To strengthen its claim, the plaintiffs argued the 20 or so smart contracts that provide the functionality to Tornado Cash should not be considered property under IEEPA because they cannot be owned:
“An immutable smart contract is incapable of being owned, it is not property and the Department lacks authority under IEEPA and the North Korea Act to prohibit transactions with those smart contracts.”
“No one has the right to alter them. No one has the right to delete them,” they added.
The second main argument put forth is that by banning the open-source code, OFAC is violating the Free Speech Clause of the First Amendment under the U.S. Constitution.
Related: Treasury officials would have done more for national security by leaving Tornado Cash alone
The plaintiffs noted OFAC has authority to take action against “crypto thieves” like North Korea’s Lazarus Group, but a “total prohibition is thus grossly disproportionate” as money laundering only accounted for 0.05% of crypto transactions in 2021.
“To ban all uses of Tornado Cash is akin to banning the printing press because a tiny fraction of users might publish instructions on how to build a nuclear weapon,” they added.
The motivation behind the motion is part of a broader effort to restore internet privacy rights for U.S. citizens, the plaintiffs explained. It is the most recent filing since the individuals first sued the U.S. Department of Treasury in September.
The six plaintiffs behind the filing are Joseph Van Loon, Tyler Almeida. Alexander Fisher, Preston Van Loon, Kevin Vitale and Nate Welch. The filing details most of the group had previously interacted with Tornado Cash.
The legal battle comes as Alexey Pertsev, the creator of Tornado Cash, faces his own in The Netherlands. He has been held since Aug. 18 on a series of money laundering charges.
Magazine: Unstablecoins: Depegging, bank runs and other risks loom
Crystal Blockchain, a company that provides blockchain data and analytics, published a study covering security breaches, fraud, and scams related to cryptocurrency and decentralized finance (defi). According to the study, approximately $16.7 billion in crypto assets have been stolen since 2011. Last year, Crystal’s intelligence team documented 199 incidents resulting in the theft of $4.17 […]
Soleimani explained that the “critical flaw” with Tornado Cash is that users cannot prove that they’re not associated with a criminal enterprise stealing or laundering crypto funds.
A former Tornado Cash developer claims to be building a new crypto mixing service that aims to solve a “critical flaw” of the sanctioned crypto mixer — which he hopes will convince U.S. regulators to reconsider its position on privacy mixers.
The code of a new Ethereum-based mixer, “Privacy Pools,” was launched on GitHub on Mar. 5 by its creator, Ameen Soleimani.
In a 22-part Twitter thread, Soleimani explained that the “critical flaw” with Tornado Cash is that users cannot prove that they’re not associated with North Korea’s Lazarus Group or any criminal enterprise for that matter.
1/ We fixed @tornadocash
— ameen.eth (@ameensol) March 4, 2023
v0 of https://t.co/Nt4b2Tgx1D is live on @optimismFND
test out the demo, but please note:
- this is experimental code
- it has not been audited
- the trusted setup is untrusted
read the full story anon https://t.co/9nAU3RrgpN
With Privacy Pools, however, Soleimani explained that depositors and withdrawers could opt out of an anonymity set that contains an address associated with stolen or laundered funds.
This feature of Privacy Pools is executed with zero-knowledge (ZK) proofs, meaning that the privacy of the user is preserved:
“Now, users have the option to help regulators isolate illicit funds, without revealing their entire transaction history [...] With privacy pools, just because someone deposits into the same smart contract as you, it doesn't mean they can also force you into sharing an anonymity set with them. It's your choice.”
Soleimani provided a demonstration of how Privacy Pools is used:
13/ Our demo is live - https://t.co/Nt4b2Tgx1D
— ameen.eth (@ameensol) March 4, 2023
Now, users have the option to help regulators isolate illicit funds, without revealing their entire transaction history.
Let's watch a brief video of it in action: pic.twitter.com/An9lWx6jfr
The developer hopes the solution will empower “the community to defend against hackers abusing the anonymity sets of honest users without requiring blanket regulation or sacrificing on crypto ideals.”
While Privacy Pools is already live on Optimism, Soleimani noted that the first version of the privacy protocol is still in its “experimental” stage because the code isn’t complete and has not been audited, but he is “pretty close to having this ready.”
To see the protocol progress further, Soleimani wants on-chain forensics platforms like Chainlaysis and TRM Labs to conduct tracebacks on deposits so that users of the privacy tool don’t have to manually create their own subset exclusion lists.
In making the case for on-chain privacy protocols, Soleimani cited what he described as an “excellent” report by the Federal Reserve Bank of St. Louis in Missouri which examined the trade-offs between on-chain privacy and regulation:
“Their report proposes to achieve effective regulation by having Tornado Cash users provide receipts to an intermediary, thus revealing their entire transaction history to the intermediary, but still being able to have privacy with respect to other public blockchain users.”
The developer hopes this can help “start a conversation” with U.S. regulators on how on-chain privacy can be preserved whilst restricting criminal activity through the use of ZK proofs.
Related: On-chain privacy is key to the wider mass adoption of crypto
Soleimani’s attempt to create a crypto-friendly on-chain privacy solution comes after the U.S. Office of Foreign Asset Control (OFAC) sanctioned ETH and USDC addresses linked to Tornado Cash on Aug. 8 in response to several alleged thefts by North Korea’s Lazarus Group, who were claimed to have routinely used the privacy mixer to preserve its anonymity.
Shortly after the sanction on Aug. 10, Alexey Pertsev, the creator of Tornado Cash was arrested by authorities in the Netherlands and is currently facing a series of money laundering charges. He remains behind bars and his next hearing will take place in late April.
One of the early contributors behind leading coin-mixing service Tornado.Cash has announced the launch of an updated version of controversial software. In a tweet to his 36,000 Twitter followers, Ameen Soleimani says that Tornado Cash has been “fixed” with the launch of Privacy Pools, which is built on Ethereum-scaling solution Optimism (OP). “We fixed [Tornado […]
The post Early Contributor of Banned Tornado.Cash Announces Launch of New and Improved Version of Mixing Service appeared first on The Daily Hodl.
Despite the sanctions on the crypto mixing service, the bad actors behind January's biggest exploit have deposited millions worth of funds into Tornado Cash.
The suspected actors behind the $6 million exploit of decentralized finance (DeFi) lending protocol Lendhub have just sent more than half of their ill-gotten gains from January into sanctioned crypto mixer Tornado Cash.
Blockchain security firms PeckShield and Beosin alerted their respective followers to the movement of funds on Feb. 27, noting that around 2,415 Ether (ETH) worth around $3.85 million was sent to Tornado Cash from a wallet connected to the Jan. 12 exploit.
#PeckShieldAlert ~2,415.4 $ETH (~3.85M) into Tornado Cash from @LendHubDefi exploiters
— PeckShieldAlert (@PeckShieldAlert) February 27, 2023
LendHub was exploited, and $6M worth of cryptos was stolen from its protocol on Jan. 12.https://t.co/vDxHlTgR0o pic.twitter.com/8FZY3v2Fe3
PeckShield previously reported the LendHub exploit was the largest in January with $6 million pilfered from the protocol.
On-chain intelligence firm Beosin tweeted that the latest movement means a total of 3,515.4 ETH, currently worth over $5.7 million, has been sent to Tornado Cash by the exploiter since Jan. 13.
Tornado Cash is a crypto mixing service that attempts to anonymize Ethereum transactions by combining vast amounts of Ether prior to depositing sums to other addresses.
The service was sanctioned on Aug. 8, 2022, by the United States Office of Foreign Assets Control (OFAC) for its alleged role in the laundering of crime proceeds.
Despite the sanctions and the website for the service being taken down, Tornado Cash is still able to run and be used as it's a smart contract housed on a decentralized blockchain.
A January report by blockchain analytics firm Chainalysis said that hacks and scams once contributed to around 34% of all inflows to the mixer and were at times inflows reached around $25 million per day, but that dropped by 68% in the 30 days following the sanctions.
Related: Crypto-related enforcement actions by US states rose sharply in 2022: Report
Bad actors in the space continue to frequent the service, recently the exploiter behind an Arbitrum-based DeFi project transferred over $1.86 million in ill-gotten cryptoto Tornado Cash on Feb. 20.
The notorious North Korean hacker outfit, Lazarus Group, often sends significant sums to mixers such as Tornado Cash and Sinbad.
An early February Chainalysis report claimed that exploited funds from North Korean hackers “move to mixers at a much higher rate than funds stolen by other individuals or groups.”
Kevin O'Leary believes U.S. Senators are “fatigued” and “pissed” at the cryptocurrency industry for having to deal with one blowup after another.
Shark Tank investor and venture capitalist Kevin O’Leary has urged crypto exchanges to “get on board with regulation” if they want to “stay out of the way” of Gary Gensler and the United States Securities Exchange Commission (SEC).
In a Feb. 20 interview with TraderTV Live, O’Leary said that U.S. lawmakers are “fatigued” over crypto collapses and that they’re only going to get more ruthless if companies continue to not comply:
“You got to get on board with regulation, you got to stay out of the way of Gensler at the SEC and other regulators. Those hombres [men] in Washington are not happy. FTX poked the bear, the bear is awake, and it is pissed.”
“These senators are really fatigued, they’re really tired of gathering every six months when the next crypto company blows up and goes to zero,” he said, adding “because they’re totally unregulated and they keep issuing tokens that are worthless.”
Venture funding for new #crypto projects is virtually dead and aftermarket trading for existing projects is at massive discounts. Reason? The #regulator is now regulating by enforcement, penalties & massive fines. The venture community has moved on to the next “big” thing, #AI pic.twitter.com/ChpjYIY9Dl
— Kevin O'Leary aka Mr. Wonderful (@kevinolearytv) February 20, 2023
O’Leary said the SEC whacking Kraken for $30 million and ordering them to immediately cease its staking services should put the industry on alert and to comply by all means.
In light of the recent regulatory crackdowns, the Shark Tank investor predicted that regulated trading platforms will be better investments than their unregulated counterparts over the next few years:
”I think the value of regulated exchanges is going to go up over the next few years, while the unregulated ones get put out of business or go to zero by the regulators.”
O’Leary recently confessed to losing basically 100% of the $15 million that FTX paid him to be its official spokesperson.
Related: ‘There will be many more zeros’ — Kevin O'Leary on FTX-like collapses to come
Despite admitting FTX to be a “bad” investment, Mr. Wonderful has continued to defend former FTX CEO Sam Bankman-Fried, claiming that the controversial figure should be treated as innocent until proven guilty and added that he wouldn’t rule out investing in the failed entrepreneur again:
I am not scared of investing in entrepreneurs that have had catastrophic failures. Failure is often the best teacher.
— Kevin O'Leary aka Mr. Wonderful (@kevinolearytv) February 7, 2023
Shark Tank investor has previously expressed dislike towards some of the more decentralized, unregulated players in the industry too.
On Aug. 13, O’Leary said Dutch authorities were in the right to arrest Alexey Pertsev — the creator of Ethereum-based crypto mixer Tornado Cash — because such applications and the “crypto cowboys” that run them “mess with the primal forces of regulation.”
