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This shouldn't have to be said but apparently it does. I don't think conspiracy to launder money and circumvent sanctions magically becomes legal just because one ingredient of doing that is publication of math.
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The developers of Tornado Cash simply published open source code. It's decentralized and they don't have any control or involvement in how it's used. A developer was arrested for writing and publishing the code. It still works and isn't shut down in any way despite bad reporting.
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How is this different from writing and publishing a virus/worm, which AIUI people have been arrested and prosecuted for even if they didn't engage in offensive use themselves but wrote it for the purpose of others to use to cause harm?
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The purpose of the code is sending money without publicly publishing all the details about it. You can share view keys with an entity that you're required to share the details of the transactions. Gives them proof of the origin and destination of the money which went through it.
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Also, who has ever been convicted of a crime for publishing an exploit / payload for research where they didn't cooperate with criminals or take any money from them? The person who got arrested after going to a US conference turned out to had done both of those things after all.
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There's a difference between publishing an exploit/PoC and publishing something intended to run autonomously to do damage once it's out in the wild.
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Signal facilitates something all reasonable people agree is a fundamental right: private interpersonal communication. Wielding money secretly is NOT something we all agree is a fundamental right.
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That's not particularly relevant. It's the law that's relevant and sending money privately isn't illegal. No legislature has deemed it illegal in the US. No judge has decided that there was something wrong with Tornado Cash. OFAC sanctioned the code. Not clear they can do that.
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Tornado Cash still works, but they sanctioned the code itself. People who used it in the past to give themselves privacy not involved in crimes or evading sanctions don't have an issue. The issue is that if you use it now, you're violating sanctions against the code itself.