The Fight for Privacy - Ameen Soleimani | ETHDam 2024

[Music] so he's already here and if you know him he doesn't already he doesn't need much introduction uh but most recently he's involved in zerx B working to integrate compliance into privacy if he hides behind me maybe he's private um but I personally consider him really a warrior in the in the privacy and blockchain space so please give it up for a meme [Applause] hello oh that's the oh it's actually sorry I can't see the slides though right on the laptop I have to just look okay oh I can see it up there nice great um so this talk is called the fight for privacy uh and you know subtext is why the tornado cash developers deserve our support uh [Applause] I'm uh I'm mean salamani I'm working on privacy pools in Oxo uh so last year I gave a talk called why privacy and I wanted to reiterate some of this uh because privacy is normal uh you [ __ ] freaks I we shouldn't really need to actually J ify this uh but we should start maybe with a warm-up I'm going to say privacy is and you guys are going to say normal privacy is privacy is normal privacy is normal thank you uh full surveillance cbdcs are coming and governments abuse their power all the time I brought this up last year as well uh sometimes you design systems with good in tensions but they end up uh under the power of people you didn't expect uh the Nazis in World War II were thrilled to discover how great the Dutch kyc was because it helped them figure out where all the Jews were uh and that's why the Netherlands had the highest rate of Jews massacred out of any of the other European countries so give it up for a Dutch kyc yeah um so I'm going to talk a little bit about the tornado cash story uh it was a privacy protocol used to generate fresh wallets uh why did we make this because we saw zcash we were jealous we thought it was cool uh we didn't want to reveal our transaction history and balances with every payment that we ever sent um there's a dow called mik Dow which I helped start uh which funded a bunch of the development of it uh it was a trying to make an open source privacy protocol to protect the security of eth users it's a second Z ZK snark deployment in history there's a thousand person trusted setup ceremony and the tornado cache team actually rageb built the DAP in about 3 weeks uh after being rejected for the grant uh we we narrowed it down to two people pick the other guys and they were so pissed off that they just built it anyway and it was beautiful and then we continued to fund the rest of their grants retroactively as well as their audits and The Trusted setup ceremony and things like that and we used it for our personal privacy uh I used it for payroll and vitalic the hero uh used it to like send money to Ukraine and stuff uh I wonder how many of the people who sanctioned the contract you know sent money to Ukraine everything was going fine until uh North Korea allegedly hacked a video game axi Infinity for $600 million why a video game had $600 million I don't know um it's different story uh and they started pushing some of those funds uh into the tornado cash contracts and and about $100 million went into it and on August 8th uh I think 2022 ofac sanctioned the tornado cash contracts and there was legal action against Alexi two days later he was arrested here because he came from Russia seeking a better life he was released on bail uh after n months of being held without bail and he was charged with laundering over 500,000 eth which he should have suspected was of criminal origin uh charges which he is denied and his trial was two weeks ago I was there Ellie was there a couple of us um and F the financial Dutch Regulators I don't know how to say it uh was request they requested 5 years in prison for Alexi uh the verdict uh for this trial will be announced in one month on May 14th uh this is uh a protest that uh was organized here in Amsterdam uh when he was arrested and you can see people holding up signs that say you know free Alexi open source is not a crime privacy is not a crime thank you all for your support uh in that uh more recently there was legal action against Roman storm so one year after Alexis's arrest on August 23rd 2023 Roman was arrested at his home at gunpoint in front of his three-year-old daughter uh the f FBI director said today's announcement should remind criminal organizations everywhere in the world that they are neither untraceable nor Anonymous you can't hide from us behind a keyboard whether you're a hacker or facilitator uh which is absurd because Roman storm wasn't hiding he was actually cooperating with the investigation uh the code was on GitHub and all of the updates were basically tweeted so if they didn't like what we were doing why didn't they send a poll request uh Roman is charged with one CH one count of conspiracy to commit money laundering one count of conspiracy to violate sanctions and conspiracy to operate an unlicensed money transmitting business he could face a total of up to 25 years in prison he was released on bail but he pled not guilty and his trial is on September 23rd in New York I plan to be there as well um I don't know if this video playing is going to work if uh this has sound and is hooked up so I'm I'm probably going to uh skip this but uh this is a video that Roman made um you can find it on the his Twitter uh R storm uh F and he talks about how he could use all of our help in uh supporting his his legal defense and that you know he's just a passionate software engineer who is trying to build tools for people to stay safe and uh he didn't want any of this um so we started a legal fundraiser for them uh it's called Uh went through Justice Dow uh and so bunch of us donated uh money to it mik DA has been basically emptied the treasury same with metac cartel nois donated as well uh we kicked off a fundraiser on Juicebox where we sucess successfully raised over uh a million dollars I didn't update those ones it's 1.5 actually hit our initial goal but then we realized that uh we might be spending more money than we thought so we're still uh fundraising for it so if you are inclined and you have the means we appreciate the support um I'm going to give some thanks to people who are helping uh and so there's Edward Snowden first up who helped amplify it and supporting the you know notion that privacy is not a crime so there's others matter Labs give 45 eth nouns Dow give 40 eth met cartel 38.7 uh jpow doeth uh 12.6 vitalic uh noun 12 coppelman is Martin cman CEO of nosis uh bgd labs and 800 others who sent what they could and now I'm going to talk about uh why the tornado cach devs deserve our support uh breaking it down into three topics the compliance tool that they went out of their way to build themselves uh the fact that they actually couldn't have stopped anything and that this legal action against both of them represents a disproportionate misapplication of the law uh so some of this got messed up but the tornado cache devs went out of their way to build a compliance tool which allowed users to essentially generate a proof that uh you know said which specific deposit you were so that if required by a regulator you could dox yourself and say hey look here's my deposit I'm not those you know criminal users of the system uh the federal res Reserve Bank of St Louis published a report on tornado cach and blockchain privacy generally where they explored the trade-off between regulation and privacy and they actually said that uh you know privacy is something that is desirable for public blockchains and that something like tornado could be a critical part of the uh public blockchain infrastructure and they recommended the use of the compliance Tool uh so the the FED said hey use the compliance tool that tornado made uh I should have posted the Tweet the the Dutch prosecutor called the compliance tool [ __ ] uh which is remarkable given that the FED uh suggested basically mandating that compliance tool as the means of regulating this whole system so it's again absurd uh the developers couldn't have stopped anything uh the Assistant Attorney General uh on the day of the tornado uh legal actions against Roman uh they said you know uh as stated in the indictment the defendants cryptocurrency service facilitated more than 1 billion in illicit transactions and they knowingly allowed a globally sanctioned cyber crime group to launder hundreds of millions of dollars on behalf of North Korean regime uh the Assistant Attorney General said that you know the defendants operated tornado cach as a safe Hyman for criminal actors and so this is what the government is trying to say is that they you know made this happen you'll see that they couldn't have actually stopped anything so this is a chart of the eth in tornado cache uh that second Peak uh is when it got sanctioned and so it's true that in the one month after the tornado got sanctioned that the amount of eth in it fell from about 240k to about 100K but in the 18 months since then uh despite tornado being sanctioned by the you know US government uh the devs being arrested uh the governance being uh hacked and the UI being broken uh as a result of the governance being hacked the amount of eth is up 40% uh the the governance actually got hacked last year while we were here uh and they ruined my t-shirts because my t-shirt had the QR code for the tornado cash . e.

linkens which was controlled by the Dow and the governance attack allowed the hacker to basically mint a bunch of governance tokens for themselves and essentially take over the ens so I symbolically cut out the QR code out of my t-shirt and burned it so that uh they would people would understand that they they didn't actually steal any of the money but they did succeed in ruining my t-shirts uh so this this explains what I what I just said the the smart contracts are immutable uh they will continue to operate as programmed until the heat death of the universe or the end of the ethereum blockchain whichever one comes first uh and not even the governance system could actually shut down the smart contracts uh there was no admin key to freeze deposits uh this would have been a security vulnerability for all users even the legitimate ones what if it was hacked then everybody's money gets taken uh and the smart contract can be accessed from any UI or command interface uh and you know they tried to do what they could which was you know the UI blocked the addresses using the chainalysis sanctions API the conclusion is that these are these are not the criminals you're you're looking for um and while I was at Alexi's trial uh some of this came up in court and so the judges uh asked him uh do you think you're using the chainalysis sanctions Oracle prevented criminal use and Alexi responded that there is nothing that anyone could do to prevent the users from interacting with the smart contracts their next question is telling because immediately after that they said well why didn't you consider implementing kyc to prevent criminal use like do you not understand how any of this works clearly not or they don't want to more likely uh and then they grilled him on on finding the predicament kind of comical uh because he said you know uh like how would you even you know Cash Out 600 million law and the judges are like did you find this funny you know you're you're not taking this seriously and his answer is like what would you have had me you know do about this and so it's it's clear that like they don't want to ackowledge that there actually isn't anything that he could have done about it uh it's also another absurd part about this is that uh using tornado cach isn't even illegal uh in the Netherlands um to be clear me advocating for you guys using tornado cach is illegal because technically that's a conspir as a US citizen that's a conspiracy uh to promote violating International sanctions but you guys have no it's not sanctioned here it's not illegal here uh and so the the The Regulators in the Netherlands are actually the only entity who could limit the of tornado cach at least in this country uh and they have not used their power to do so uh they prefer instead to try imprison Alexi for writing on stoppable code and maybe The Regulators should be the ones who are prosecuted for not doing enough to limit the use of tornado cach in my opinion uh if you're trying to throw the wrong guy in a box you deserve to be in a box so disproportionate misapplication of the law this is a meme I made uh about how when Banks who can actually stop criminal activity and have the power and they don't they don't actually get like criminal charges they get fined um and the tornado cach uh gets crucified so this is some some notes the you know cartels when the HSBC was money laundering for the cartels uh $900 million uh no one went to jail no one was sanctioned uh there was a civil enforcement by ofac and there was a deferred prosecution uh with with fines essentially by the uh Department of Justice and with tornado cach ofac went straight for sanctions the Department of Justice and FID went straight for criminal indictment and uh fiod requested Alexi has you know 5 years in jail uh and so the tornado cash devs are fighting for all of us uh the outcome of this will have you know faring consequ quences for eth devs and users especially people working on privacy tools uh if they lose they face imprisonment and government overreach will only reach further um this is just to explain like how the judges and prosecutors think uh at one point they were taking issue with the idea that uh they made the code open source uh so uh they they asked him in court is it possible to have deployed the smart contract but not made the code public and an open source and I actually lost my [ __ ] uh in the courtroom and I very loudly ex I was like what uh and almost got thrown out everybody started staring at me and stuff um I actually went up and asked one of the guys at fed after this happened uh I was like hey um have you ever used a smart contract before he's like yes I'm like would you use a Smart contract if the code was not open source he's like I see where you're going with this I'm like yeah I bet you do uh I I forgot to bring up my noggles but uh I wanted to give um special thanks to ndow and uh Brennan eth he wrote a Manifesto that I think is relevant and I'll read it out uh about uh along with their donation of of 40 eth to the um legal defense we find ourselves at a pivotal juncture in history where our actions and decisions will significantly influence the landscape of Commerce and freedom across our Global Village voices rise in unison advocating for the Liberty to engage in Commerce for the autonomy to innovate without undue hindrance and for the sovereignty to partake in the vast tapestry of global trade These Are Not Mere theoretical Concepts they are the Bedrock upon which we construct our shared economic future let us be clear our resistance is not born out of a disregard for governance or societal welfare instead it is rooted in the belief that true true economic prosperity flourishes in an environment of freedom and open competition our struggle is not against regulation per se but against the overreach that stifles Innovation creativity and Equitable access to markets thus let us Advance with determination not as adversaries of Regulation but as advocates for balanced and reasonable Frameworks that nurture Innovation and Equitable Commerce let our resistance be a testament to our commitment to economic freedom a beacon for open trade and a claran call for the empowerment of all participants in the global market thank you ndow and Bren go away man s sit down uh special thanks to them that we turn this into nfts and you can buy them and support the cause uh we just take a second talk about privacy pools so we're advancing with the Privacy pools.com uh the compliance tool that the tornado cach team pioneered uh users can basically publicly dissociate from illicit funds uh you know when you deposit into the system uh if we do a trace back on the money that comes in and we figure out you know did this come from a defi hack or some terrorists and if it does then uh we exclude it from our white list and people who withdraw can prove they say hey like I'm not going to tell you exactly which deposit I am but I can prove to you that I'm none of those guys and so we think this Bridges the gap between privacy and compliance it allows the good gu to have privacy but not necessarily associate with people they don't want to while they're doing so uh it helps accomplish the regulatory objective which in our mind is isolating the illicit funds while still providing privacy for legitimate users and testet is live it'll probably go live in a couple weeks um and so this is sort of the idea of how it works you can exclude the you Pro provably exclude uh from your anonymity set the people people that you would like to not associate with um shipped a working demo last e Denver published a paper with vitalic on privacy pools and compliance worked with Dr Fabian Shar and his team from University of bosel um we've been pres presenting the work at a regulatory conferences uh I'm a compliance guy now shocker um and so yeah we we built this and uh I'm now advising a company called Oxo zero Expo which is doing the monitoring and actually building the white list so if you're building privacy infrastructure and you would like to discuss how to you know be compliant we're ready to talk to you and so in conclusion uh putting the devs in chains for eternity and feeding their guts to the Eagles will not put out the fire of Z zero knowledge proofs uh in the future the future that we want depends on zero knowledge privacy Freedom versus you know Cal Cal Bank digital currencies we want blockchain democracy you want to be able to vote without being coerced or bribed or uh revealing it and being insecure and so uh in the story of Prometheus uh Hercules actually comes and frees uh Prometheus and so we can all be Hercules together and free our Promethean friends who dared to steal the fire of zero knowledge proofs from the gods on our behalf uh please follow free Alexi Roman and thank you very much thank you very much um do you want to ask answer some questions do you want to take questions very quickly we can spend like three minutes on it but you guys have to go on slido and type in your questions because there actually surprisingly there weren't any questions which means he either did an amazing such an amazing job there are no questions um all right you guys have three minutes let's see no ideally it all goes through the through the slido what is your philosophical view on actual like compliance if you can try and summarize that like because we didn't really get too into that and you said you're a compliance guy now uh like to my friends out of prison as a primary objective uh and I I think like we're going to eventually want hello uh we're going to want yeah uh we're going to want to build things that uh you know allow us to uh secure our communities you know and so like maybe the government mandates uh that we have to have you know certain requirements but even if they didn't uh things like privacy pools where I can provably dissociate from people uh are interesting to me and I think pref like preferable for me than something that forces me to associate with with people I don't want uh I think the freedom of Association implies the freedom of dissociation so okay well we have some questions did you bring your noggles you said no right they're in my backpack over there somewhere well I think someone wants to do something with you I don't know good luck um the one so the top question here is if systems are fully automated surely privacy pools will decolorize protocols that were developed before privacy pools were made would you like to give that a credit I don't really understand the question uh well like what does de collateralize mean uh let's see does someone want to shout that okay we're going to move on where do I get the nft that you mentioned uh yes follow uh free Alexi Roman on Twitter and you can check out their tweets and see the uh nft fundraiser from the manifesto that the nouns Dow brandon. youth made perfect uh why don't you work together with the government uh uh we are trying to the this not every government has the same views about privacy America likes to spy on everybody uh the Swiss are uh somewhat more enlightened about this as you might guess uh and so the they understand the value of privacy their central banks are the only people I've ever heard that actually uh wanted privacy for their citizens for their cbdc which is kind of astonishing uh because they they don't they understand that if they build a system poorly and there's massive data Honeypot of everybody's Financial history eventually it's going to get hacked and they're going to reveal that to everybody and they don't think that's a a very good idea fair enough and we'll take this one as a last question uh what are the next steps of the Judgment against alexe is unfavorable what are the implications to Smart contract developers great question um I think the next steps are you know we keep fighting Alexi can appeal the judgment and we can escalate it to other courts um and then the implications for smart contract developers are uh it depends on how it goes and like which of the charges uh end up you know being used against them but uh the the the kinds of thing that you know one one of the things that was brought up in court hello hello okay basically that uh you know they said that uh if if he couldn't control it uh he shouldn't have made like they shouldn't have made it immutable uh because one day it could have been used for crime and I think that's like the really bad you know most pernicious like uh possible because then it's like you could be like like I don't know you make Unis swap V2 and then somebody LPS on it and then uh that's used for crime and then they come after you because you made the thing and that's like not a world anybody wants to live in so I think uh we should try to this case and also try to work with Regulators to make laws that help give us some uncertain more certainty around uh the tools that we're building cool well thank you very much and um I'll take that from you thank you thank you [Music]