# Keynote: Glass Houses and Tornados by Peter Van Valkenburgh | Devcon SEA

- Speakers: Peter Van Valkenburgh
- Channel: [Devcon](https://streameth.org/devcon)
- Date: 2025-10-09
- Duration: 15:17
- Topics: blockchain, smart contracts, distributed ledger, ethereum, Science & Technology
- Watch: https://streameth.org/watch/yt-haxfI3A-E4g
- YouTube: https://www.youtube.com/watch?v=haxfI3A-E4g

## Description

The Tornado Cash sanctions and criminal prosecutions have challenged longstanding assumptions within crypto about the limits of money transmission licensing, money laundering statutes, and sanctions laws. They've also revealed a longstanding assumption from some in policy and law enforcement circles: that blockchains have always been and must remain transparent. Neither assumption has served us well and the time has come for legal certainty. This talk is about how we get there.

Speaker(s): Peter Van Valkenburgh
Skill level: Intermediate
Track: Cypherpunk & PrivacyCypherpunk & Privacy
Keywords: Legal, Government, Regulation

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## Transcript

so I'm Peter van valkenberg and I am a lawyer in Washington DC I'm the director of research at coin Center coin Center among many other things is suing the US Department of Treasury for their tornado cash sanctions but before we talk thank you before we talk about the law I want to tell you all a bedtime story a story about clearville the land of glass houses for as long as anyone could think of the town of cille had only one building material to speak of glass cars made of glass shops stores and Halls why even the homes had glass roofs and glass walls now the glass of clearville was unusually strong so nobody worried about glass built too long or breaks shattered bits or cuts from the shards they only did worry about looks from The Yards you see the town folk of cille were very polite they were watched from morning through night they were also a little bit dull an entire town in a creative lull because people who are always watched seldom do anything worth watching they're just too afraid to be judged for the things they might be botching but one day a stranger came to town in a terrifically tall truck of instant Renown the size of the truck was one for the books but even stranger was its very new looks you see the truck wasn't made of glass not at all it was positively opaque a monstrous wall and once they got to thinking about it even more alarming was that because of the truck's sheer opacity no no one could see what might be inside its capacity they'd soon find out for the stranger went by the name of shade and shade had just one goal sell Shades and get paid curtains blinds why even frosted glass and sell them he did right from the truck he sold his lot to the last you see the cleair vilans were pretty darn sick of always looking over their shoulders even in the relative privacy of their glass people holders a few said well I've nothing to hide but even those folks admitted a curtain or two in the bathroom was good for their pride soon every house in clearville was positively swathed with Shades and shade he didn't only have strange wees to sell he had some tall taals to tell he talked of his friends back in the land of Uncle why there was paint wood and stone even vinyl veneer now markets science and Trends they tend to move faster than the state comprehends so it was with a shock that the mayor of cville awoke one morning to a Dark Dark Room the sun's gone out he said with a start oh no it's just the wall that the neighbors have curtained in part but mayor clear's mourning was about to get worse still not out of bed he heard cleair vilans chanting in verse peeking out of his windows he saw them outside they'd come to complain from near far and wide not about shade but of other intrusions from the chief of police Constable I and his inapt conclusion it seems I had been bothering them all banging on doors whenever he'd call this was something new to the town it once was the case that I would simply walk by and well spy to be sure there was nothing so Sly going on in the houses of cille but now well now he had no way to tell what Troubles of foot all that glass was as see-through as soot he had particular suspicions about houses too sick six and nine of whose inhabitants there wasn't a sign were they in there how many and what were they doing he swore if he listened he heard improper coing yes I was near certain that the folks in house 9ine behind a red curtain were paying for favors Sublime my eye said mayor clear I trust you I do and forgive me my sneer but you can't just barge into a house that's suspicious You' you got to have evidence your hunch is propitious I have a better plan sir I said with a stir we'll simply go raid the truck of that despicable shade and so to shade's truck they went sorry to shad's truck they went to learn of the curtains he lent to houses 96 and two to charge him with Crimes of the rest of that crew I just gave them some shade he said for the money I made just what they might do even inside of my view was none of my business or trade so you saw what they did and it's that which you hid what a very fine Tale Now will take you to jail and of this Troublesome Truck will be rid and that my friends is the end of our clearville charade gone was the source of the infamous shade pay you no mind to the many Loose Ends like what of the new materials from all of shade's friends should they sell in cille I guess it depends and what have cair vilians still fully ensconced in the Velvet velour shade already had launched are they allowed to keep drawing those blinds no or yes but only if they have no crimes in their minds so clearville is Bitcoin and ethereum for it inherited all of the transparency of bitcoin's blockchain and the lesson here is that we shouldn't assume that the particular transparency of existing technology is some kind of moral or ethical imperative rather than a mere technological accident or a temporary limitation shade is tornado cache or really its development ERS tornado cach is the bolts of new fabric that people can put up in their glass houses and the lesson here is we should not assume that the inventors of incremental improvements are inherently doing something wrong nor should we assume that these inventors are one-offs or frauds who can be ignored in many ways this technology is inevitable if not tornado cache then there are countless other projects and potential protocols which will continually improve bringing privacy I think not just to ethereum but ultimately to any and all Global transactions now there's also an ambiguity in the story shade might only be selling curtains but he might also have installed them and while installing them while providing these tools he might have seen some things in houses 2 six and nine he might have even seen them committing crimes and so the question here is at what point is someone doing more than sharing tools for General usage at what point are they conspiring criminally perhaps to further some crime by providing those tools if they've no personal interaction with those potential criminal users Beyond publishing a smart contract and a website that criminals use along with others are they somehow now culpable for the crimes if they are not culpable at that point then are they culpable if they Continue to update the software on the website after it becomes apparent that some of the users of the website are committing crimes so really the question is when should shade have stopped installing the curtains when he noticed some funny business happening in a back room when he was told explicitly that they wanted the curtains to hide criminal activity should he demand identification and Criminal background checks before installing curtains in people's houses and also what fraction of users should be suspected criminals before the service is deemed a de facto criminal service and that mere fact is somehow Prima fascia evidence of a criminal conspiracy for which the developer of the service can be held culpable so you know a very reasonable estimate suggests that Swift the global international bank settlement Network May facilitate the movement of approximately 800 billion to 2.8 trillion in illicit funds annually that's a whole hell of a lot more than tornado cach in absolute terms now in relative terms as far as the share of the elicit fractions size relative to Total flows it is smaller and so my question here is simply should we pick a number should we pick a percentage and finally is there something about money and money laundry that makes it different from my Parable we don't obligate home security installers to actively identify and Report their customers crimes to the police we don't hold the developers of encrypted messaging services responsible for their users crimes that are discussed on their platforms at least we haven't in the past it may be changing now is money somehow special why and what of our story's very unsatisfying ending the one with all those loose ends shade is in jail his truck was impounded what good does this do so even if we arrest and incarcerate all the inventors of these tools the tools and ideas they remain in the world they can't be uninvented and can only be universally confiscated through extreme tax itics and the invasion of many innocent person's rights so the question is can we ever get cville back in this manner my story is actually far less extreme than reality it would take only a handful of night raids by the infamous Constable eye to pull down all the red curtains and restore the town to its prior transparency but with digital tools on the internet well those tools are infinitely rep applicable they can be copied shared spread they can be made immutable and it's likely a Fool's errand to try and forbid anyone from using these privacy tools online and the other question here is can we or should we ban the legitimate users of these tools alongside the criminal users I think not I think it's important that people remain free to anonymously donate to nonprofits that are advocating for political change coin Center accepted a handful of donations through tornado cash before the sanctions were announced I think it's very good that our donors could use that tool to protect their privacy when they were exercising their First Amendment right to assemble and petition the government I think it's very good that our John Doe co-plaintiff in our lawsuit challenging the sanctions can privately send money to support the defense of Ukraine without immediately drawing the scrutiny of the Russian intelligence services so if we don't want to just ban the legitimate privacy users uses of the tech what can we do can we can we pre-screen the legitimate uses can we filter out the bad does that kind of prior restraint scale is it fair constitutional and who decides which uses are good and which are forbidden the US government the European Union Thailand B uh Berlin Bangkok who finally there's another reason that tornado cash matters and it's this even if we disagree about the Privacy security balance that we'd like to see in the world and even if we disagree about how many eggs we'd like to break to get there there's still a procedural and rule of law question who should decide to craft this policy in our system the courts presidents Prime Ministers Regulators should it be elected officials or mere appointees because right now for Roman that policy was not made clear by the legislature in advance of his arrest it's being made on the Fly by the unelected prosecutors who are interpreting existing laws for money transmission Licensing in fact their interpretation is antithetical to the interpretation of the federal regulator finsen and I see a glaring rule of law issue here and that perhaps is the biggest reason why the persecution of the tornado cach developers Alexi and Romans is unjust so please support their defense this is Alexis's defense fund this is Roman's defense fund and please support our civil claim to find that the sanctions against tornado cach exceed the statutory Authority and should be thrown out in conclusion I don't want to live in cille I don't think you can force me to live in clearville if I've not committed other crimes I don't think you can arrest the people who give me tools for privacy in my entirely legal day-to-day Affairs merely because someone else who got the benefit of that privacy wanted to break the law and even if I have to live in clearville I would expect the Dignity of there being a public debate amongst my elected officials a vote a signature from the president or a prime minister before they pull down my curtains and stare through my walls simply claiming that the existing laws already gives them the power to do that is the opposite of Law and Order so thank you for listening to my story and come find me if you want to offer your support [Applause]