# Swarm | Ignorance is bliss - compliance vs privacy - Fatemeh Fannizadeh | ETHDam 2024

- Speakers: Fatemeh Fannizadeh
- Channel: [CryptoCanal](https://streameth.org/cryptocanal)
- Date: 2024-10-07
- Duration: 27:24
- Watch: https://streameth.org/watch/yt-Yfk0b75s8qM
- YouTube: https://www.youtube.com/watch?v=Yfk0b75s8qM

## Description

Thanks to Fatemeh Fannizadeh from Swarm who powered through the technical issues and still managed to deliver a great keynote - “Ignorance is bliss - compliance vs privacy” at #ETHDam 2024. 
https://x.com/Fatalmeh https://x.com/ethswarm 

Jonathan Knegtel - MC of ETHDam, data aficionado and your favourite wooden bowtie. 

ETHDam - a conference and hackathon held in the heart of Amsterdam, Netherlands from April 12th to 14th, 2024, celebrated its second edition, gathering more than 600 participants. 

In the dynamic space of ETHDam, privacy and security took center stage, featuring groundbreaking discussions on hacks, recovery, and the revolutionary work of figures like Pertsev. Privacy is dead in crypto, people that know, know. People who don’t know, should know. 

ETHDam is powered by CryptoCanal, an education and events platform growing in Amsterdam, spreading its roots to Rotterdam and Zürich.
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## Transcript

[Music] hi everyone while I'm setting up I actually wanted to ask you so um thank you JJ for the introduction I haven't slept much yesterday night uh and it's unfortunately not because of the like wild Amsterdam nights um but I was glued on my phone just following the news of what's happening in the Middle East um and I was not alone I was with some of you and uh we were discussing and yesterday night I was thinking I'm not really feeling talking about like privacy techlaw right now um it's uh kind of was very dissonant uh at that point and then this morning I was like you know what business as usual um we don't know really what's happening and there's so much we can know and do right now so I was still going to talk to you about Swiss banking secrecy and privacy but uh this morning when I got to The Venue um some of the people with whom I was yesterday um I haven't tried yet some of the people I was with yesterday uh were like no no we should talk about something else and use this opportunity to um yeah just explore other topics and because it's so early and we're lucky that so many of you are here um I was going to ask you what you prefer so do you still want to hear about Swiss banking secrecy and how it got eroded over time because of us pressures related to tax evasion it sounds kind of very interesting to me I don't know if I sold it well or do you want to just have a more inclusive open floor where we discuss still about very relevant topic of what is Law and what is regulation and what are we complying with and it's going to be mainly if we decide to do this mainly open questions with no answers um but I think this is very interesting to see also what questions are other people's head and um so I don't know if you want to have like a show of hands maybe for banking secrecy whoa nice I didn't have time to count but like quite a I'm impressed thank you and for the other topic open floor discussion about law well I'm going to bridge both but banking secrecy wins which is uh great since this is being set up don't do my [Music] telegram don't [Laughter] do close your eyes it's only over there okay great um well let me just let me let me just I I can't just make it full screen close everything else was not connect um so there's weed crumbs in my port in the laptop port okay well I can I can still start and then we catch up with the slides the first slides are anyway not not that interesting so my name is ftim f I'm a Swiss qualified lawyer um I please DJ tell me about the time because I totally lost track of okay thank you um so I I I used to work in big law firms doing white color criminal defense um just big dispute resolutions and this talk is obviously not legal advice there's a slide about it um it's more about just general thoughts about the space and drawing parallels as I told you before with um what has happened in the Swiss banking sector um so I became a lawyer and very early on I decided to uh become freelance um and open my own law firm and give uh advice to my own clients and at that point um I went to the banks and asked them to open a professional bank account for me and I had very good relationships with these banks for all my life in Switzerland and when I went there they refused and they refused to tell me that they refused so I literally been ghosted by these Banks and I was like really upset and be like why aren't you opening a bank account for me and finally I eventually found out that my last name flagged in their system because it's Iranian and it was like right before Trump got elected as president and somehow they had like increased um scrutiny and decided the banks had decided to exclude um I'm seeing my own screen to exclude um all Iranians without like doing any form of like personal assessment of um like the risk of EV every individual they were like anyone with an Iranian sounding name anyone with an attachment with Iran we don't want their business and they did that not to comply with Swiss law what they did was actually not legal in Switzerland they just discriminated me based on my name what they did was to eventually comply perhaps with US policies and regulations and when I realized this I got really mad I thought that Switzerland is literally colonized through its banks by the US like why are private entities in Switzerland far from the US have to just change their business model in order to comply with some form of future hypothetical risks and then people who are legitimately in Switzerland doing business working living there impacted by this like potential future us politics and that's where looked for alternative Financial systems and this is like my origin story into Bitcoin and crypto and I was like this is great like crypto is this peer-to-peer electronic cash system it provides this alternative it's sensorship resistant permissionless decentralized Cypher punk I totally bought into this narrative and I'm glad I did and it was very beautiful back then so it wasn't that long ago but still the landscape and especially the legal and Regulatory landscape has changed a lot since then and um there weren uh many mainstream users like the way we see today there wasn't defi the way we see today there was way more privacy on bitcoin or on generary crypto that's what we see today like Analytics tool developed way much after um they were more usages there are more instances where um it becomes relevant to use Analytics tool there's more more data to be used as well um and naturally after this we saw all the Privacy taxs being built especially on ethereum and this is my Gateway into the topic of uh briefly tornado cash and I'm still going to look at my own slides for myself H okay thank you um thank you so yes crypto was somehow private and wasn't anymore and then we had tornado cash and I'm not sure about you all here but I would like to assume that at least back then um we're all very enthusiastic about this tool that we may have used this tool may have praised its usage um may have seen it fix an actual problem that ethereum was causing and I have this great meme I would like to share with you that I made but I'm like so I've been asked to come here talk about law and oh thank you so you're going to see me go through all of it it's not legal advice uh what is the law what is being a lawyer blah blah this is me somewhere it's my origin story that's my face when I found out um Bitcoin yes so I'm like I'm I'm supposed to give you legal advice about about crypto privacy Tech but like what can I say even right like we love this we love turn cash I don't I have not heard any lawyers prior to sanctions who would have even imagined this being possible so like any advice I would give you now to avoid any form of legal risk will either not satisfy you and will definitely not satisfy me so I rather not even talk about this oh it's here but I want to just make this statement before we move on to the banks in tland that because of many reasons that we're going to discuss before that I mentioned briefly before after and mentioned briefly before um I stand by the side of the tornado cach developers and as long as their cases are pending I will never stand before you and tell you that tornado cash is not a good tool so I want to make that clear I don't think they have done anything illegal or worthy of being prosecuted the way they are being persecuted Ed right now and I think that all they have done was just to innovate in somehow regulatory unknown Waters and this does not deserve this form of reactionary proceedings I also think and this is maybe more controversial and I'm happy to discuss it later with you if they are responsible I think we are all as well should we have been users or anyone who praised tornado C and why is that the case because of the network effect and what it requires to actually offis skate and and provide the whatever Services turn into Cash was giving to its users but because the users are not going to suffer any consequences I don't think these developers should and now I'm gonna ask you who else is often persecuted for moneya laundering or tax evasion where their users are not impacted and I gave it away before yeah Banks the banking sector and um there's this thing in Switzerland called banking secrecy and yesterday actually someone told me that banking secrecy in the US means something entirely different than what it means in Switzerland so like the banking secrecy act in the US is basically basically like a kyc act like where like banks have to give away their secrecy while banking secrecy in Switzerland fundamentally means something different means that Banks as much as your lawyer your priest your doctor must keep your information confidential so this was historical it's not necessarily the case as much as it was before but this was a very big part of Swiss culture and the SS Marketplace and I'll close my laptop sorry being distracted and um next yes the banker the priest the lawyer no not the lawyer the doctor and um yeah so you could go and open a numbered account with a with a Swiss bank so no name attached to it they would like not send you any mails at home no one would know this account even exists and to whom it belongs so because s in such a neutral place it's very safe for foreign Capital to come and remain there and I think that this is the closest we ever had within like big amount of Fiat uh to self custody so the same way we can have our Ledger back then like there was a way to have your money somewhere you have to trust just the bank to keep it for you but the trust there was pretty high and um and this is it it was censorship resistant like no government could go and thank youa and and yes so the closer you can get to self- custody and for me this is very like when I realized this I was like I understood that um that actually why San Is So Pro privacy it's like so deeply embedded in the culture and it's not necessar so there was a huge attack against it and we're going to get to it in the next slide but nonetheless it remained as a core thing that they had to compromise based on pressure and because of this I think suan can still be seen as an ally who understand the fundamental value of privacy so the main criticism against Bank secrecy obviously are tax evasion so mainly like foreign J addiction the US is topped there France after we mad that their Nationals or tax residents were offis cating funds by hiding them in Swiss banks and that Swiss Bankers Were Somehow liking this side of the business and the other part is money laundering so you also have then funds that are from Bad actors ill gotten money dictators money and so on transiting this is the other side of the coin of privacy always and tax is how they get you I always tell that to my Cent clients so like the tax evasion um like you have to pay your taxes to be left alone a very important thing to have in mind something we don't really see with Dows like tornado cash was it a taxpayer the Dow well maybe you know if you pay someone then you get something in return that's up in the air but I love this so like the it's taxes in in the US I think the deadline is tomorrow or something um yes you have to report your illegal activ money and your stolen property do not forget and that's actually made to get you so if they cannot imprison you because of whatever reason or not long enough for whatever illegal you've done they will be like but you did tax evasion and like this is I think it's called the AL Capon rule or something but yeah and the US has gone really hard against Swiss banking sector to try to basically get the information it needs get the name of the clients the money in the accounts it has done so by arresting SS Bankers who are traveling to the US either to get business or on vacation so a lot of Swiss Bankers actually ended up being prosecuted in the US even like serving time um and Banks were fined a lot of money so I like did the summary here I think in total 7.5 billion um and there were some deals like they went through all the banks I think the this the only place in the world beside the US where you have to open a bank account they make you sign few forms where you guarantee you're not a US person so like I have nothing in the US no attachment no Us phone number like nothing um because of obviously these type of fines and since 2017 that's kind of the death of banking secrecy there was the aut atic exchange of information that came into effect so now they will send with countries with which they have this agreement so Switzer and us they will spontaneously each year send details about their us tax residents um users uh account holders to the US IRS so no more self custody as before and uh that was not long ago a few years ago so this is still all very very new and like very fresh also in the hearts of Swiss Bankers um and I'm wondering with Swiss banking and with um crypto privacy Tech did it become legal and compliance Tech like did we lose objective privacy and have to now somehow do it selectively and I don't think that the parallel is that straightforward and I started started also by hinting towards this that um like we cannot do the same thing to tornado cash or any similar privacy enhancing tool on the blockchain that like the same approach cannot be adopted that it has been with with the Swiss banks because the whole system is different the banking sector doesn't depend on network effect right it's a business decision they get like premiums right like dict I'm sure dictators have to pay more to open their account than normal user like there's a price for the risk and they make that decision to to to take it while here we're talking about tools that are open to everyone that are not selectively choosing the risk which doesn't mean that this Cann be something to innovate for or create right but when we're talking about the law and complying we have to know with what we are complying and is this um like the law of the US no matter where you are like is this legitimate to you do you want to do this are you like going to suffer from any risk if you do or you do you do not um I think we need to highlight the fundamental difference in the teag and stand by them as well so like we can compromise and do kyc on say my time is off well yes yes we should it's actually my last slide kind of is um and um yeah so more dialogue I think between the tech and The regul Regulators are necessary but I still think that we should think outside the box and that may sound kind of banal but there are things we can do and ways we can think and parallels we can draw and allies that we can find um that do not necessarily require us to compromise on the level that we've been told we have to right cuz you know there are multiple opinions in the world and the world is way bigger than our little eoch chamber and I just listed a bunch of questions here that for me are very valid questions like I remember still the days it wasn't long ago where we're like is is code law and is um is it a bug or a feature right the exploit like should we like you know not be mad at the hacker like should we be mad at somebody else whom and all of a sudden all these question vanished and like we haven't really resolved them but then we realized that like reality caught up with us but I still think that there is something to be found in the more fundamental question and also like realizing who decides what we are allowed to do what we're not allowed to do and why these people decide so so and so so like something to look into is like why are we having kyc as the only solution and is it actually a solution and how can we question whether it is or it is not a solution and who decides even that and once you like start looking and like removing the layers of the onion you realize oh like there isn't much holding it you know there is like an organization called the financial action task force like who made it you know like how legitimate and Democratic is it um well like these are up in question they academics actually writing about it it's not just like Fringe you know like like criticism but it's just points like when when you realize like you know the base of the pyramid is not that strong and there are things we can do I think we should fight money laundering right we should like fight against criminality we should not be wining wanting to associate with criminals like these for me are all very natural we don't need to spend much time on it but I think we should figure out by ourselves how to do that best and everyone would be better off even the society at Large well thank you thank you really nice and also thank you very much for coming today really really appreciate it um so if we can switch to the slid let's see if there are any questions um we have definitely a time for for a few questions um I don't I don't even know where to start Switzerland is the original tornado cash is that even a question like I love it can someone take a photo of this please and tweet it um yesterday we had that uh uh ETFs are the new Bitcoin l2s by the way um yeah um yeah would you like to take the next question would I kyc mixer protocol be able to get a license um so I guess it depends on it depends right like every I think I will say we'll start with that um but um I think it's a really good step forward to get the license for sure um and I think there are even like Banks kind of doing that between amongst themselves or thinking of projects like this right because like if like you have only mixers between entities that have kyc all of their users then you kind of Rich um and I think the mixer question is is more related to everything that surrounds it than just the act of mixing so like you have you know different models like you have privacy pools that raises its own question solves a bunch of other questions um you have full kyc uh there is a horror array of things that you can do but definitely if you want to go down the licensing route I think this uh could be uh appealing to the regulator again we're doing amazing with the questions right now taxation is theft um do we want to comment on that I don't know no no okay moving on defiance or engagement Defiance or engagement um I would say both yeah cuz like one without the other is kind of you know you just go halfway way like I I ideally we defy all together but then I'm criticized for being like too radical so engagement I think one of the really fun things about the conference that I've been learning about is how privacy in from a technical layer where you don't have a choice so in a way you're being defined but you can also have Smart release of information smart privacy so it's what you said both I which want to very much like that um do you want to speed through the one these ones and then that's it yeah yeah how might we reach consensus on the more fundamental issues you've mentioned this is the question of the meta governance so how can we set up a governance to decide on the governance well um I think this is an open question and no one has really the answer I would say through culture and just discussion so the more we talk about this topic the more we publish read think the more we share then it kind of somehow is created whatever so there are hackers in the room like whatever design decision you make within your projects then this will become a standard in some way right it will F fit within a whole ecosystem and move the needle so every single of your decisions actually do matter on that front uh thoughts on private selective disclosure uh kyc I kind of don't like kyc if you didn't realize it's it's just um it's wrong you know it's like it's good like we want to keep some people away but we don't want to keep the normal people away like this I would always say that like an Iranian shouldn't be outside of the whole financial sector shouldn't not have access to wealth to wealth management to like jobs to like a UI like just because you know like there's added tax I call it that added cost of being a born somewhere and I don't think this is really fair cool um and we take the get your tax lawyer yeah um why there was a good one uh would be a great way to prevent moneya laundering in defi I I I I don't know about this but I would say one thing that no matter how permission defy at least on ethereum becomes there are other chains and other ways of doing so I know like already like when I speak with friends uh who are using it to just like you know fight against hyperinflation in their country and so on um they don't usually use ethereum and uh they love usdt that's what we got time for unfortunately well thank you so much I love this part thank you [Applause] [Music]