147: Tornado

23:47Video games can operate just fine on quarters. There's no need to invent a whole new currency just to play them. And the currency can only be bought, never sold. And it stinks when I come home from an arcade and there are a few extra tokens in my pocket. These things are worthless except for one place in the entire world. So Axie Infinity was built directly on the Ethereum cryptocurrency, utilizing smart contracts. But they soon hit a problem. When you play video games, you want it to be fast. Ethereum transactions were slow, sometimes taking a few minutes to complete, and the fees on Ethereum were high, like often costing$30 in fees just to buy an Axie from another player.

24:31So to fix that, Sky Mavis, the creators of Axie Infinity, created a sidechain of Ethereum called the Ronin Network. This sidechain was very compatible with Ethereum, so players could move their money in and out between the Ronin network and the Ethereum network easily. And that mechanism of moving money between the two, they named that the Ronin bridge. The Ronin network was much faster and had very low fees, like less than a cent, making it much more ideal for a video game to be played on this blockchain. But for this Ronin network to operate, there needed to be nodes and validators. Sky Mavis didn't want to be the only one controlling those nodes and validators because if they were, they could theoretically control the whole network.

25:14I guess if you have a majority control of the validators, you could manipulate the system if you wanted. The idea of a decentralized network is that nobody should ever have a majority of the validators so that it can't be manipulated. So they made sure to have people outside their control also running nodes and validators. You can play on a browser, I think, most people playing on a phone. It got so popular, there were reports in the Philippines of people giving up their jobs just to play this game full time. Now, of course, as soon as that happens and hits the headlines, you get this rush of people who all think, oh, I'll do that.

25:48And of course, it became a pile on. People just went for this game, particularly in Southeast Asia. So there's this very valuable company with millions and maybe billions of dollars worth of cryptocurrency assets running through it, swapping around. Moving fast, moving a lot. This will attract somebody who wants to steal that money. Inevitably, as soon as you start to make scads of money as a video game, somebody tries to hack you. And that's exactly what happened with Axie Infinity. A lot of scammers and thieves flocked to this game, trying to steal things from other players. Some players' crypto wallets were loaded with tens of thousands of dollars of Axie Infinity assets.

26:35And scammers were trying hard to steal stuff from players' wallets. One common tactic is to get an Axie Infinity player to connect their crypto wallet to the scammers' website. Maybe by saying something like, oh, we're giving away a free rare Axie. With some cleverly crafted message, they can trick a person into giving them access into their wallet. Which then the thief can drain everything from it. Hundreds, if not thousands, of Axie Infinity players were victim to this type of attack. And I should say that even though attacks on players and cryptocurrency-based games is very common, it's not unique to only crypto-based games.

27:08I remember when I was playing World of Warcraft a long time ago, someone somehow got into my account and transferred all the gold and removable items from my character into whatever account they had. I got digitally robbed in World of Warcraft. And if you hang out in the Counter-Strike forums or Roblox forums or Fortnite forums, you see people begging for help every day, saying their account got hacked or their stuff got stolen. There's a lot of money in stealing video game assets. It's crazy. Ideally, what you want to do is you want to go to the source of all the money, the fount of all the money, which, you know, SkyMavis' sort of servers themselves.

27:46and so the hackers targeted one of the engineering team and carried out a very very elaborate or at least in my opinion very elaborate social engineering exercise on this person offered them a job now that's not an uncommon thing for you know crypto developers to get game developers get poached all the time and so they said look great job for you really big salary you know are you interested in talking to us and this employee said yes started receiving details of the job, did apparently a couple of rounds of interviews for the job, which I presume was webcams off, but, you know, was interviewed by people for a job that seemed to exist.

28:24Of course, none of this was true. There was no job. This employee of Sky Mavis was being targeted by hackers who were trying to maneuver them to the point where they would effectively download malware. Hmm. So we don't know how they made contact. My first thought was Discord. A ton of scammers are on Discord trying desperately to hack into people's accounts. But in this case, I'm willing to bet the initial contact was made on LinkedIn. It's kind of easy to find developers for Axie Infinity on there to begin with. Then it's only a few clicks away before you can message one of them. And it sounds like they messaged a developer offering them a job.

29:00So if that's the case, it's not so hard to create a fake persona on LinkedIn to look like you work for some prestigious company, making the whole story more believable. I mean, who gets job offers on Discord anyway? LinkedIn is the place to go get job offers. The other thing you can do if you target someone in this way is you can say to them, hey, for this job, we need to know that you can use this particular piece of software. Can you download it for us? Or can you click on this link and go to this private server so you can do this exercise as part of the job application? There's lots of ways with a job application that you can sort of trick someone into doing something they wouldn't necessarily have done, downloading stuff, clicking on links.

29:37So I find that really, I think that was a really sort of smart way of operating, one for people to watch out for. Eventually, malware gets downloaded by this employee of SkyMavis onto their work device. Now, full disclosure, I don't think SkyMavis have revealed how that specifically was done. But you can think of multiple ways whereby you'd be able to convince someone as part of the job application process to download something. There's lots of ways to do that. Effectively, the malware allowed the hackers access to SkyMavis' computer systems And because they targeted an engineer who had what SkyMavis describes as very deep level access, it wasn't like they hacked somebody in the HR department that had to work their way over to the development environment.

30:20They were already in. They'd hit the mother load effectively and were already in at a very deep level inside SkyMavis. Yeah, I mean, if you get malware onto a developer's computer and then take control of their computer, then you can assume the role of that developer in that company. You have their access keys, their logins, their privileged access to the network. With their deep-level access to SkyMavis' systems, the hackers start scoping out how Axie Infinity works and how this money is moving around. I bet they were looking for a central wallet, like cold storage or something, where SkyMavis stores all the keys and has access to millions of dollars in crypto.

31:01But they couldn't find that. So the second thing was, with all this money flowing through the system, was there a way to grab it somehow? And what they realize is, what we've covered earlier, is there's this internal blockchain within Axie Infinity, monitoring transactions between the players. There's the external sort of Ethereum blockchain, which is effectively bringing in money that people are, you know, Ethereum, Ether currency that people are spending into the game and then putting it out. So there's a conduit through which this is all happening. And that conduit is a thing called the Ronin Bridge.

31:36The Ronin Bridge's job is basically to reconcile what's going on in the game with what's going on in this external Ethereum blockchain. Effectively, the Ronin Bridge is nine computers around the world. And those computers are looking at all the transactions inside and outside and reconciling the two ledgers together. So basically, the hackers realize very, very smartly, that's the pinch point. That's the conduit. That's where the money's going across. If they can control the Ronin Bridge, they can effectively control the flow of money. And since there's millions and millions of dollars inside Axie Infinity, they can control that money.

32:13Now, the thing about this is there are nine computers as part of the bridge. It's effectively nine what they call validators. And Sky maybe sort of thought about the possibility of getting hacked, to give them credit, and they only controlled four out of those nine, which isn't enough to give you majority control. So you can't just take over SkyMavis, get control of the bridge and take the money out. The hackers had to find a fifth computer. So they have five out of nines that got majority control. And this is where things go wrong for SkyMavis. SkyMavis had outsourced the other five validator computers to external companies.

32:50So they weren't in control of them. So SkyMavis didn't hold all the cards effectively. But one of the companies it outsourced to gave SkyMavis a temporary access to its validator. And that temporary access was never revoked. The hackers somehow managed to realize all of this and thought, we've got four computers validating SkyMavis. We need a fifth to get majority control. There's the fifth one. We've still got access to it via SkyMavis. We've got five out of the nine computers. And guess what? We control the bridge. We control the money. And it's time to steal. Wow, I think the level of knowledge needed to pull this off is quite remarkable.

33:32This is not so simple as opening up a wallet and transferring the funds out. To take over five of the nine nodes of this side chain and to know how to operate them in a way that will allow them to steal money takes a specific skill set. Whoever did this must have had to prepare quite a bit for an attack like this. It kind of reminds me of that one time my friend went and bought an antique for, I don't know,$1 ,000 or something. And on his way home, he stopped for lunch somewhere and his car got broken into and the thieves stole the loose change in his cup holder. They looked at that old antique and didn't think it was worth anything and left it.

34:08Whoever was targeting Axie Infinity knew exactly where to look to extract the most amount of value they could from the system. They knew exactly where the value was. And I don't think many of us would know how to work these controlling nodes, even if we could take them over. But when they took over these nodes, they got immediately to work, setting up an attack which would allow them to transfer as much out of the Ronin network as they could, and as fast as they could, directly into the Ethereum wallets that were ready and waiting. They set up everything, and using their control of the bridge, deployed a command to transfer the money.

34:44They stole ETH, ETH currency, and USDC. which at the time was valued at$625 million.

34:58$625 million. Yes. I'm trying to think. Is there a single cyber heist that is more than$650 million? I can't think of one. I'll go further than that. I've been a bit circumspect in the book, but I'm being less circumspect the more I go on. I think it's the biggest theft of all time. And I'm going to add a couple of qualifiers to that, because that is a big statement to make. I'm talking about one-off theft. Obviously, ransomware as well, you know, has made billions over time, multiple victims. I'm talking about one victim, one hit. At the time the theft happened, because obviously there's, you know, the Bitfinex hack, you know, the one that Heather Morgan and Ilya Lichtenstein got sentenced to it.

35:42Well, that was, I mean, that ended up being$3 billion, I think. But at the time of the hack, it was 70 million. So I'm talking about valuing a crime. At the time the crime was committed, one off crime, one victim. And so I've been doing, you know, you Google and you Google and you try and find these things. And, you know, there's the Isabella Stewart Gardner Museum heist is one of them. So that was, I think, 93, was it? They broke into the museum. They stole artworks. The artworks were valued at 500 million. Now, that's often listed as being one of the most, you know, expensive heists of all time.

36:15That's only 500 million. So I know I'm out on a limb here, but I do think it's a serious, if it's not the number one, it's a very serious contender for biggest theft of all time based on one hack, one victim, one crime, one victim valued at the time of the crime. Now, some of my listeners might be shaking their heads right now and think, no, Jack, none of this cryptocurrency is real money. This is not the biggest heist of all time. And in fact, a lot of articles which list the biggest heists of all time. Don't include any cryptocurrency heists. But the thing is, these thieves immediately started exchanging it for traditional money.

36:51So to me, if you can swap it quickly and easily for any currency you want, then, yeah, to me, it's real money. Yeah, it may start off in crypto and you may turn your nose up at that, but it ends up in hard dollars and hard dollars that can be used to fund criminal activity and some very serious, as we're going to talk about some very serious criminal activity. Maybe I should have mentioned this earlier, but the reason I'm talking with Jeff about all this is because he just published a book called Rinsed, which is all about money laundering in the modern world. And I just finished reading it, and it sent me down a wild, twisted tunnel into the world of money laundering.

37:25Now, what we're talking about in this episode is a single chapter of the book, though. The biggest heist of all time, Axie Infinity, is interesting by itself, but the thieves are now faced with a staggeringly huge challenge. How do you cash out$625 million in stolen cryptocurrency? If you sent it all to an exchange, they might not be able to swap that much. Or they might freeze your account and you could lose it all. So while they immediately started sending some of it to an exchange, that was only a small amount and they needed a big plan for the bulk of it. We're going to take a quick break here, but stay with us because after the break, someone's going to prison.

38:06This episode is sponsored by NetCraft. Every Darknet Diary story starts with a scam, a breach, or a crime. NetCraft works behind the scenes to not only disrupt the threat, but to remove the infrastructure that enables adversaries to launch more attacks. Uncovering phishing kits, dismantling malware networks, and disrupting brand abuse at scale, NetCraft stops threats across the open web, social platforms, and the dark web. Trusted by leading internet and infrastructure providers and brands large and small, they clean up the web a little more every day. Proudly earning one-star reviews from cybercriminals and five-star reviews from customers, Netcraft's automated brand protection platform sifts through the noise to deliver high-fidelity signal that powers takedowns at any scale.

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39:05The news broke pretty fast. Axie Infinity's Ronan Bridge hacked. $625 million stolen. Lots of people lost a lot of money, and including Sky Mavis itself. But of course, everyone wanted to know, who did this? Good question. I mean, obviously, it very quickly hit the news. this had happened. And in fairness, Sky Mavis did a sort of rolling blog on what had happened and were filling people in. And of course, because it's cryptocurrency and because all cryptocurrency moves across a blockchain, which is almost always publicly available, particularly when the hackers transferred the money out from Sky Mavis, it was publicly viewable.

39:48People start looking at the wallet addresses to which the money's being sent. They start looking at the methodology behind the hack. And very quickly, the name that pops into the frame is North Korea. North Korea. So North Korea's military has something called the Reconnaissance General Bureau. In it are believed to be where thousands of hackers are trained and tasked with completing military objectives. This isn't the first time they've been accused of stealing millions of dollars in crypto. And it's estimated that they've stolen over a billion dollars in cryptocurrency now. and I can't think of another country where their government is hacking for financial gain like this.

40:27No, that we know of. It's certainly very rare for nation state hackers to be put on the send for money. Of course, North Korea is in this unique situation. North Korea is unique for a lot of reasons, but the unique situation that they are under international financial sanctions, have been for a very long time, have, it seems, largely run out of money or run out of legitimate sources of money. And so the accusation is that North Korea's computer hackers are tasked with gaining currency by any means necessary. And that's, from what we know of North Korea, not unusual. It's diplomats historically have been tasked with not just being diplomats, but, you know, can you also make a bit of money on the side, please?

41:06Hmm. But now that I said that out loud, that I don't know of another country that hacks for financial gain, I'm reminded of an episode I did with a CIA agent. It was episode 116. called Mad Dog. In it, a CIA agent told me he tricked a diplomat from another country to give him information on an upcoming trade deal between the U.S. and that country. He saw what their bottom line was, the lowest amount that they would accept in the trade deal. And he gave this information to the U.S., who in turn used that information to save the U.S. billions of dollars in the trade deal. Is this hacking for financial gain?

41:44Social engineering for profit, maybe? I guess economic security falls under national security, and countries will go to great lengths to keep their economic security going well. When you steal cryptocurrency, one of the hazards of this is it's inevitably going to be on a blockchain somewhere, and that's almost inevitably going to be public. And so it's almost like you've gone into the bank and stolen a whole bunch of banknotes, but they're all fluorescent yellow. And people can see in your pocket that you've got these banknotes. So your key task as a cryptocurrency thief is to launder the money.

42:20And that's why I've written a book about money laundering. Well, hang on a second now. So they have 170 ,000 Ethereum tokens. They need to turn that into dollars so that they can buy whatever. Why don't they just set up an exchange in North Korea that they can just send it to and be like, all right, done. That's a very good point. One of the things that people have spoken about is the idea of North Korea sort of setting up a cryptocurrency exchange. I guess the answer to that would probably be, firstly, there's this idea, I think, with all these thefts that are attributed to North Korea, that North Korea gets the money back to Pyongyang and that's where its destination is.

43:00Well, there's nothing to buy in Pyongyang. There's no point sending it there. Yes, you could set up a cryptocurrency exchange in Pyongyang, send all the cryptocurrency there, withdraw it in, I think it's still won is the currency they use. But then you've got North Korean currency in North Korea. What are you going to buy? What was the point of that? What you want is to ship the money to, I don't know, you want to buy widgets in Frankfurt, bull bearings in Frankfurt. You want to pay somebody off in Brazil. You want to get hold of missile technology secrets in Afghanistan. You want the money mobile.

43:36You want it flexible. So you want to be able to move it around. And also,$625 million is a huge quantity of money. You've got to take it somewhere where there's enough liquidity that somebody will buy that cryptocurrency off you in exchange for cash, well, fiat money, dollars, pounds, yen, whatever. And so this was the challenge that North Korea was faced with, if indeed it was they behind the hack, that they were trying to take this money somewhere that could absorb it and turn it around and give it back to them in cold, hard currency. Okay, so North Korea has$625 million in stolen cryptocurrency, specifically Ethereum and USDC.

44:16We should say, these are allegations. North Korea denies these allegations, obviously, being involved in these hacks. Okay, so it's supposedly North Korea. A lot of evidence points to them, but we don't know for certain. I think it was. Now, the way these cryptocurrencies work is there's no way to recover that money. This is real ownership. As I was saying earlier, there's no central bank that can reverse the transfer or pull the money back out. The money is North Korea's, and there's nothing anyone can do about that ever. Except, North Korea is under strict sanctions, which means it's forbidden to do business with them.

44:49On top of that, it's stolen money, and those wallets were flagged. So exchanges won't simply let them exchange it into cash. What they need is a chop shop. The only reason why I know about chop shops is because of playing Grand Theft Auto. And when I was playing the game and I stole a car and the police were chasing after me, I could take that car into a chop shop and they'd scratch off the bin, paint the car a different color and give it a new license plate. Then when I got back on the road, I could drive right past the police without them knowing it's the same stolen car since it looks entirely different.

45:21But with cryptocurrency, you can't hide very well by just transferring the money into a fresh wallet. There's a big glaring transfer displayed publicly for anyone to see. Moving it into a new wallet doesn't do anything to hide your tracks. They somehow needed to clean this money, so it can't be linked back to the money stolen from Axie Infinity. By this point, the wallets into which the crypto had been transferred, the stolen money from Axie had been transferred into crypto wallets, and those wallets were flagged as being recipients of crime. And the law enforcement had acted quite quickly and gone around to the major exchanges, the big legitimate crypto exchanges, and said, hey, if anybody tries to transfer you money from that wallet there, don't take it because it was stolen from Axie.

46:01And so they tried, I think,$60 million worth of exchanges, the hackers, at legitimate sort of above the line, above the board exchanges. And that money all got frozen. Because of course, as soon as the exchanges received the money, they went, oh, this is the stolen Axie money. Yeah, we're keeping this. And so the hackers lost tens of millions of the stolen money because they tried to pump it through the legitimate system. And the legitimate system just froze it. So then they needed to find somewhere else. Where can you go with hundreds of millions of dollars of stolen crypto? And just put it in, no questions asked.

46:35And that's what led them to Tornado Cash. Tornado Cash? I've used Tornado Cash before. Let me tell you why. Okay, so I was going for a coffee a while back in my town. And I noticed they accepted Ethereum cryptocurrency. And I was like, hot diggity, people have been donating Ethereum to my podcast. I'm going to use it to buy some coffee. So I started to get it going. But I thought, wait a minute. Hold on. No way. This is a bad idea. My donation wallet is public. So anyone can see where I spend my money. And if they see I spent it on coffee in my town, that might expose where I live. I go to extreme lengths to keep my private life and public life separate.

47:21it. So I need a way to move this money into a personal wallet so I can spend it without people able to see where I'm spending it. So what are my options? I could send it to an exchange and then send it to a fresh wallet. But to use an exchange, I have to give them my personal details like my driver's license and stuff, which seems a bit much just to buy a cup of coffee. Isn't there a simpler system, one that's more privacy-focused? Yeah, Tornado Cash. Tornado Cash is great. You send your money to it, it gets thrown in a pool with a bunch of other people's money, and you get sort of a claim ticket.

47:58And at any moment, you can use your claim ticket to get your money back out into a fresh wallet. Essentially, this allows you to transfer your money into a new wallet, but it removes the tracks of where it came from. What's great about it is that it's all automatic. I was telling you about smart contracts before where you can add code to the Ethereum blockchain. Money is programmable now. So I can see the Tornado Cash code, verify it looks okay, and then get my wallet to interact with it directly, giving it my money and getting that claim ticket back. And the way Tornado Cash worked is that they purposely built it so the creators themselves never took control of your money.

48:36The only person who would ever have control of your money is you. The smart contract is programmed to handle the money, but the creators built it so that they can't even control the smart contract anymore. They literally coded all zeros in for who can control it, which means nobody can. As this story sort of emerged, one of the people who'd used this particular mixer was Vitalik Buterin, who, of course, came up with the Ethereum protocol, I think co-developed it. And he said, look, this is exactly what I did. I wanted to donate to Ukraine. I didn't want to do it publicly. and that is the hazard of using crypto, it is public.

49:11So I used a mixer because I want to preserve my privacy. There are good privacy-preserving reasons to use something like Tornado Cash. And that's, I suspect, the reason Tornado Cash was set up largely was for those privacy-preserving reasons. Okay, so you might be thinking, hold on, this is just a Bitcoin tumbler, a mixer for money laundering. And there have been lots of them in the past and weren't they all illegal anyway? Yeah, that's the thing. This one was different, very different. The ones in the past were typically custodial mixers, meaning someone is actually in possession of your money.

49:44If someone put a gun to their head, they could hand over all your money. These kind of mixers are illegal because the person holding the money should know whose money they're holding. Like, if I give you something illegal to hold, you could be in just as much trouble for holding it as me. And yeah, a bunch of people were running these mixers and were caught by the police and arrested for running unlicensed money transmitters. and the police were able to shut down those services. The difference here is very important. A custodial mixer is where you give your money to some person to hold for when you want it back.

50:16While a non-custodial mixer, the money is held on the blockchain, not in anyone's possession. Kind of like if you just stashed your money in a locker somewhere and then you gave the key to someone else and they got it out. The place that owned those lockers had no idea what you put in there so they can't be held liable for whatever was in there. Kind of like a dead drop. Now, I imagine the makers of Tornado Cash saw that custodial mixers had been shut down and arrested in the past. And they probably knew full well that a service like this might be abused by people. So Tornado Cash developers were like, we have to be absolutely certain that we're never in possession of anyone's money ever.

50:57We can never have custody since those kind of mixers are illegal. So it's only with the invention of smart contracts that they were able to make a service like this, that they could be completely hands-off, a service that nobody was operating or running. It was headless. And the developers could never touch anyone's money, even if they wanted. It was coded that way. In no way, shape, or form are they ever in possession of anyone's money. And they went to great lengths to prove that. Not only that, they wanted this thing to be extremely resilient and impossible to be taken down as they felt that privacy tools like this were very important to people.

51:35Also, a lot of these mixers in the past were tailored for criminals. So Alphabay, for example, was a darknet marketplace where people could buy and sell illegal items. Well, the site had its own crypto mixer specifically designed to help you hide your illegal purchases. And in the world of cybercrime, intention matters. If you are building something specifically for criminals to conduct crimes with, That's racketeering, and you could get RICO charges against you. But the developers of Tornado Cash held on strong that this was a privacy tool. That was their point. And to make that clear, they didn't hide in the shadows of the dark net.

52:13They were open about their service and made it easily accessible. I mean, they even had a Twitter account and a normal website, which all clearly said, this is a way to have private transactions on Ethereum. So as you can see, as a person who values my own privacy, I found this tool to be helpful and important. Decentralization is very fascinating to me too. My website, darknetdiaries.com, is hosted on a single server somewhere. But Tornado Cash was kept up by hundreds of thousands of people running Ethereum validators. And there's something amazing and beautiful about that. We can put something on the blockchain and you know it'll permanently be there as long as Ethereum exists.

52:56You've understood exactly. That's precisely what it is. At least that's what the claim was from inside Tornado Cash. As we'll talk about later on, others have cast a lot of doubt on that. But certainly that was the claim. Look, Tornado Cash is this headless organization. And once you use it, you're effectively using an automated machine. It's like going up to a vending machine, sticking your money in, getting the can out. And the vending machine has been forgotten by whichever company was meant to own it. It just runs on its own. Well, clearly, I wasn't the only one to use Tornado Cash. The people who stole the$600 million from Axie Infinity also noticed Tornado Cash and sent hundreds of millions of dollars to it.

53:39Now, this obviously presented a lot of problems for the particularly United States government. because they can see that money's gone from the stolen, the money's gone from Axie Infinity, been stolen, sent to Tornado Cash. They believe it's North Korea behind this. But, like, who do you prosecute? You know, who do you prosecute? There's nobody behind Tornado Cash at this time. That's what they thought. So it's like, what do we sort of do about this? So they did the next best thing, the US government. They put Tornado Cash under sanctions. And Basie said, look, this mixer, this Tornado Cash mixer, is working for the North Koreans, we believe, we claim.

54:15And therefore, anybody who interacts with this mixer and sends money to it, receives money from anybody who interacts, who's in the US, people, organizations, doesn't matter, they are breaching sanctions as well. We can't shut Tornado Cash down, but we can freeze it out by saying, you cannot interact with anybody in the US anymore, and anybody in the US who interacts with Tornado Cash, you've committed an offense and we can come after you. Sanctions? What? What? The privacy tool I used got sanctioned? Hold on, hold on. This does not feel right. Okay, I need some names. Who created Tornado Cash?

54:50Yes, three people, it seems, created it. They are Andrei Pertsev, Roman Storm, and Roman Semenov. They work for a company called PepperSec. And I think it's, as we'll get into, there's some legal proceedings around this that we have to be quite careful about. But I think it's fairly uncontroversial that they set up Peppasec and they created TornadoCache. But the key thing is they created it, they say, to preserve privacy. And having created it, they got to a certain stage and said, okay, we now burn our passwords to this. We step back. We have nothing more to do with this. It's running on its own, the TornadoCache DAO.

55:26Oh, it was a DAO. Of course. DAOs are fascinating. What I'm saying is an acronym, D-A-O, DAO, and it stands for decentralized autonomous organization. And this is a perfect example of one. The internet has changed everything about our lives. You know that already. Every day I get online and I chat with loads of people from all around the world and I visit websites from other countries and it never feels like I'm traveling far away to another country to interact with them. It's just right here on the screen in my bedroom, just milliseconds away. The internet has connected us in a way where national borders just don't seem to exist anymore.

56:06So if you were to start an online business that exists only online and there's like no physical product or reason to have a home base and maybe you start it with two other people, like one person is from Europe, another is from Asia, and the third is from the US. What country do you establish your business in? Forget it. Why not just make it an online company, not part of any nation at all? Is that possible? I mean, traditionally, you needed to make a company like an LLC or something in order to get a business bank account to do business with the world. But since this service is all cryptocurrency based, you don't need a bank.

56:46And autonomous means the company can continue to operate without anyone controlling it. Tornado Cash was one of these DAOs. It was decentralized and autonomous. It existed only online and was capable of operating all by itself. This is another new thing in the world that didn't exist 10 years ago. These DAOs exist online only. It's a business that isn't seeded in any specific country. Why should it be? If people are getting paid from a DAO, then those people can just report their income on their taxes and say they're contractors for that organization. So the U.S. federal authorities were mad that hundreds of millions of dollars were stolen and then sent through Tornado Cash.

57:28They wanted to seize the funds and shut down the service. But like I said, Tornado Cash was built in a way that it was impossible to turn off and they never had control of the funds ever. So the only tool the U.S. authorities had to try to stop it was to sanction it. Which I don't even think you can sanction an app, a piece of code. I mean, it's still there on GitHub for anyone to see right now. So if it's illegal, why is it on GitHub? And code is just words and symbols. So in essence here, they've sanctioned a bunch of words that in a certain combination has meaning. So can you even sanction a page with words on it?

58:09Isn't there like a free speech violation in here somewhere? But not only did they sanction the code, they decided to arrest the people who started it. But what was their intention for starting Tornado Cash? Because as I said earlier, in the world of cybercrime, intention matters. It really does. And well, there's two sides to this. You can go on the back of what they said and what their defenders say, which is this was a privacy-preserving tool. The intention was never to enable money laundering. However, the counter-argument from the authorities, which they're making very strongly and in court, is it doesn't matter.

58:46So if you're going to run a money-transmitting business that's dealing with, as Trinidad Cash was, hundreds of millions of dollars, you are obliged to think about money laundering. You can't just naively set the thing up and hope no criminals are going to use it. That's not how it works, buddy. You have to obey money laundering laws. So we've got arguments on both sides. We've got arguments the intention was never there. We've got the argument on the other side saying it doesn't matter. You're on the hook for this if you set up these businesses. As you can tell, I'm being diplomatic about this, A, because there's legal procedures about it.

59:16B, also because I hear both sides. I do genuinely hear both sides. And that's the thing. It's a fascinating debate. It's why it's a fascinating story. The police are saying intention doesn't matter here. The act of creating open source code and putting it on the blockchain to help make your financial transactions private was illegal because someone misused their tool. And I want to point out here that the U.S. government isn't clear on whether cryptocurrency is even money or not. The Commodity Futures Trading Commission, the CFTC, classifies it as a commodity. The SEC classifies it as a security.

59:55The IRS classifies it as property. And FinCEN, the Financial Crimes Enforcement Network, classifies it as money, which is what requires people to follow the anti-money laundering laws. The government has made all this so confusing. I hate being in this position. I don't want to take the side of criminals who stole this money. But because I want to live in a world where financial privacy exists, I feel like sanctioning privacy tools hurts me. Yes, but the cost of that, I think if you do 100 % privacy, you have to protect people you don't like as well. It's a fascinating debate. This is why it goes around and around in my head in the same way it sounds like it's going in yours as well.

1:00:36Because the money transmitting rules they were supposed to follow was KYC, which stands for Know Your Customer. For them to operate this legally, they would have had to ask everyone who uses the service for their real name, identity, upload your driver's license, tell them your address. And when you do all that, now it's not so private anymore. Well, now creators have to maintain a database and a whole backend full of people's personal information. I don't want my personal information in a database somewhere just so I can privately buy a cup of coffee. The best privacy tools are the ones who know nothing about who I am.

1:01:13When the financial system becomes a surveillance system, we start having big problems. Look at China, for example. They have this social credit system where if you do things the government doesn't like, they can restrict what you buy. They can also see everything you buy and make judgments about your character based on it,

1:01:45I mean, let's look at some legitimate use cases for why you'd want to use tornado cash to hide your transactions. You heard me say that I like to have this buffer between my public life and my private life. The internet is a big, old, dangerous place. And if you don't believe me, listen to the previous 146 episodes of this podcast. It's important that we secure our stuff and take our privacy seriously. Also, imagine going to buy something from someone. And as soon as you give them the money, they can look to see how much money is in your bank account and all your previous purchases. This is how Ethereum works by default.

1:02:20So we need a way to shield our purchases from the rest of our transaction history. You heard how Vitalik, the creator of Ethereum, wanted to donate to Ukraine but wanted to do so privately without anyone knowing. There's another reason. He's a public figure. He wants to keep his political activities to himself. There are non-profits that I know of who go to great lengths to keep their donors private. Because donors don't want the public to know what causes they're giving towards and don't want any extra solicitation from people asking them for more money. But I keep thinking about stories of people living in oppressive regimes.

1:02:51China, Russia, Iran. If you live there and speak up against the government, you could easily go to jail. And these governments want strict control over their citizens, so monitoring financial transactions is crucial to keeping a strong grip on them. So dissenters and activists in these countries absolutely need a way to send and receive money in a private way. To support their cause and educate people in the atrocities of their own government. Their life depends on private financial transactions. Churches and charities don't care if you deliver them a big bag of cash as an anonymous donor. And that's none of anyone's business if I want to donate anonymously.

1:03:28I want the same thing for digital transactions. I think taking down privacy tools like Tornado Cash hurts regular people. Which was exactly the basis on which the crypto campaigners sued the United States Treasury and Janet Yellen individually after the sanctioning of Tornado Cash. this decision to sanction Tornado Cash went down very, very badly with large swathes of the crypto community as to be said for exactly the reasons you've outlined one of the key arguments and a fascinating argument is to what extent are you responsible for the downstream effects of code that you create and make available the people who saw this decision by the US Treasury to sanction Tornado Cash said well you can't sanction code you can sanction the person who misuses the code you know you don't if somebody gets stabbed you don't prosecute the person who made the knife you prosecute the person did the stabbing um and so that was the argument on which the u.s treasury one of the arguments on which the u.s treasury is being sued the other line of argument was that code as you said is freedom of speech and freedom of speech is constitutionally protected those cases by the way that the attempts to sue the treasury um over its decision on tornado cash got rejected, have not done well, but are being appealed as far as I'm aware at the moment.

1:04:46So they lost in the first at least one round, maybe two rounds, but they're continuing that campaign because they argue exactly the same as you're saying, which is, you know, this is code. You don't prosecute code because if you do, you dampen freedom of speech, you stop people inventing code, there's a chilling effect. That's the risk here. And that argument is still playing out in the court. I want to just take a step back here and note that this story wasn't possible like 10 years ago. This is such a novel new world we're in. Money used to only be physical, but with credit cards, it's turned virtual.

1:05:19And with everything being online today, we need digital money. Money used to be controlled by governments, but now with cryptocurrency, it's controlled by the people. And it's like we're in the middle of a major revolution here. Money is power, and the governments are losing their power as cryptocurrency becomes more widespread. So of course they'd want to put up a fight against it. And now with smart contracts and DAOs, businesses can be fully autonomous and always online? How crazy is that, that a company can exist and make money and act as an online service and it doesn't need to be maintained or controlled by anyone?

1:05:52This is an entirely new kind of problem for the U.S. government to deal with, and they don't really have a good way to combat against it, other than sanctioning the code. If you aren't familiar with how sanctions work, it means the U.S. Department of the Treasury's Office of Foreign Assets Control, which is OFAC, has declared that you are forbidden to interact with tornado cash. If you do, you might get arrested. But it also means your money may become frozen if you send it to an exchange. I mean, typically, when I buy things or go online, I don't ever think about whether or not I'm violating sanctions.

1:06:29Like, for instance, if North Korea is sanctioned, I don't expect North Korean-made goods to be in my supermarket where I could buy them and break sanction codes or something. I assume the shop owner knows not to buy sanctioned items to try to sell them to me. So it's completely off my radar. But here's a situation, which I think is the first time ever, that an online application is sanctioned. This is unprecedented. And so now, I don't know how to navigate this world. Am I supposed to check the sanctions list every time I go online, visit a website, buy something, use an online service, this breaks my brain.

1:07:09You are clearly not the only person who feels this, because in the wake of the US government sanctioning Tornado Cash, somebody clearly felt even more, felt very concerned by this, and very put out by it, and thought the whole thing was ridiculous, this idea of sanctioning. And so they set up a stunt, which is another bizarre wrinkle to this story, and an intriguing one. So the thing about Tornado Cash is, even though the US government sanctioned it, it's still up and running. You can still use its code on the internet. The website went down, but that doesn't matter because the protocol, you can still send money to the protocol effectively, and it will do what it's programmed to do and effectively mix the money and anonymize the money.

1:07:53So the thing about that is, if I know, Jack, your Ethereum wallet address, I can use Tornado Cash to send you money. and there's nothing you can do about it. It just gets sent to you automatically. So someone, somewhere, we still know who did this. And I'm waiting for the day, actually, Jack, when they turn up on your podcast. Somebody took$50 ,000 and started randomly sending it in tiny bits, tiny, tiny amounts to anybody who was famous who had an Ethereum wallet, including Jimmy Fallon, the comedian Jimmy Fallon, Shaquille O 'Neal, basketball star, Shaquille O 'Neal. They started receiving. And of course, it shows up on the blockchain.

1:08:28You can't hide it because you see Shaquille O 'Neal's address and you can see it's received money from Tornado Cash. That's all logged. And so technically, I guess you could argue Jimmy Fallon and Shaquille O 'Neal have breached sanctions or sanctions dodging. And I guess you could say they should be prosecuted for that. But the whole point of this exercise was to show how ridiculous it was that anybody, even famous people who've done clearly nothing wrong, can then, as a result of this sanction of tornado cash, get implicated in sanctions busting. The idea was just to illuminate how ridiculous this was.

1:09:03And so I don't know what Jimmy Fallon and Shaquille O 'Neal have done about that, but it's tricky. It was a fascinating sort of stunt that emerged as part of this. So North Korea sent about$450 million worth of crypto to Tornado Cash to try to mix it. There's cryptocurrency tracing companies who claim they left it in for about four weeks and then extricated it. What we don't know, of course, is who it went to thereafter. So you can, with mixers, I mean, particularly when you're mixing a huge amount like 450 million, there are companies that track crypto. One of the things they do with mixers is they look at the amount going in, the amount going out.

1:09:40Now, you can't link, you know, this cryptocurrency payment is linked to that one going out. But you can see the volume and you can see the amounts going in, the amounts going out. And so I think that's what they've done is they've looked and gone, look, 450 million goes in. We can look at the outflows. And sure enough, four weeks later, 450 million comes out, to put it in very simple terms. And so that money is now somewhere in cryptocurrency wallets. The other interesting thing is, well, then, who do you take that to cash out? you've got to say to somebody, right, you know, here's$450 million, which came from tornado cash, don't know where else.

1:10:15Could you transfer that and change it into pounds or dollars or yuan or whatever? There are people out there who'll do that, no questions asked, that they'll take a big cut. But doing that to$450 million, you've got to have some brokers that've got some serious, serious liquidity on their hands to be able to change that. So the theory, I think, from some people is that there's a bit of a glut now of stolen money that the North Koreans are accused of stealing that they're trying to cash out, but they can't cash out quickly enough. There's nobody who can buy it off them for the$450 million or whatever that they need.

1:10:49So that's where that's ended up all that money. I guess a chop shop wouldn't even work here because it's more like you stole a giant bus and no matter what color you change it, you're going to look like a giant bus coming out the other side. Yeah, exactly. So ideally, you want a chop shop that can convert your big yellow bus into a bunch of tiny little smart cars or whatever. Just going back as well, this idea that Tornado Cash was sort of leaderless is now being thoroughly challenged in the courts. The first thing that happened was a guy called André Pertsev was arrested in Holland and accused by the Dutch government of running Tornado Cash.

1:11:30Roman Semenov is also indicted by the US government. He's believed to be in the Russian Federation, so hasn't faced trial. I've tried to contact Roman Semenov, hadn't heard back from him. Subsequently, after the sanctioning of Tornado Cash, the US government charged Roman Storm, who's in the US and is, I think, currently being tried and is in prison. Again, fascinating trial. The same arguments are coming up in his trial as we've talked about. people saying, look, he did not run this. He was trying to preserve privacy. That's why he set it up. Now, going against the idea that these guys didn't run, in inverted commas, Tornado Cash, is a slightly inconvenient fact, which is that, according to the US government, they owned a lot of the voting tokens and crypto tokens inside Tornado Cash.

1:12:16So the way this works is, you know, Tornado Cash is leaderless. It's done by vote. Any changes to Tornado Cash get done by vote using tokens. I think part of the US government's argument is, well, hang on, a lot of those tokens were in the hands of these three individuals. So they may say they didn't have control, but actually, we think they did. Also, they say that they were still making money out of Tornado Cash. And so all this leads to trying to knock down this argument the defendants have, which is that, oh, we didn't run it. The US government is saying, no, you did run it. And here's the evidence why.

1:12:45So the guys who started Tornado Cash, two have been arrested. And in May of this year, the first verdict came in. Alexei Pertsev was tried in the Netherlands, and the judge found him guilty and sentenced him to five years and four months in prison. The cops took his Porsche and 1.9 million euros in cryptocurrency. The press statement from the Netherlands government says, quote, tornado cash is not a legitimate tool that has unintentionally been abused by criminals, End quote. Not a legitimate tool. In fact, the judge said specifically he could not find any legitimate use for this tool. As if privacy itself is a crime.

1:13:29What's fascinating about this, it sort of starts with a hack on a video game to do with salamanders, and it ends up in this kind of epic battle royale over freedom of speech and privacy. And yeah, I find it really, really fascinating. It's almost like the kaleidoscopic story. You look into it, it's got everything in it. Yeah, we've gone all over the road here, haven't we? How are you going to edit this one down? I do not envy you that task. Another way to look at this is that the feds are saying that the developers of the tool are responsible for how users use it. And that's a bit crazy, if you ask me.

1:14:06It's like saying a lighter company is responsible anytime someone uses their lighter to commit arson or a drone maker is responsible anytime someone uses their drone illegally, like spying on people, flying in the wrong airspace, or dropping a bomb on someone. Or it's like saying a VPN provider gets arrested, shut down, sanctioned, because some of their users went online and did something illegal. Or my goodness, is an encrypted messaging app responsible for people doing criminal activities on it? I mean, we know criminals use iPhones. Apple knows criminals use their phones. In all these cases, the tech itself is neutral, and it's up to the user to use it responsibly.

1:14:49Governments have never faced anything like this before, and they simply have no precedent to act on here, and in my opinion, are just drawing really fuzzy lines arbitrarily. They can't even come to a consensus on whether cryptocurrency is money or not. The worst example you could possibly think of, maybe with the exception of child sexual abuse, one of the worst examples you could think of would be a country using this kind of technology to get nukes. I was like, oh yes, we've got that. So it's almost like your privacy-defending hat, your privacy-defending head is being put to the most extreme test.

1:15:24It's like, you want privacy? Right, what about North Korea nukes? It's almost like that's immediately what's happened. because it's gone to them. You know when you're arguing with somebody and they just go to the most extreme example of comparing you to Hitler or whatever? It's like that's happened. Now it's North Korea. What are you going to say now? It's, yeah, fascinating. Genuinely fascinating. Okay, I don't buy that argument. Why? Because all this happened and they didn't catch the real criminals here. In fact, I think even if they implemented KYC, North Korea would just have used like some fake ID and it wouldn't have helped catch them or slow them down at all.

1:15:55North Koreans are still on the loose with their fresh and clean$400 million. And they're the real criminals here. Go after them. It's crazy that this story starts with someone stealing hundreds of millions of dollars, and the people who end up in prison are the privacy advocates. And as I'm researching all this, I had to refresh exactly what does money laundering mean? The act of money laundering is to hide the cash you have that was involved in some illegal activity, stolen money or drug money or something like that. Me trying to hide my transactions isn't a crime. It's only a crime if I'm trying to hide criminal activity.

1:16:30And by the way, Tornado Cash, despite being sanctioned, is still up and running because that's how it was designed, fully autonomous and decentralized. In fact, there's YouTube videos out there that explain how to still use Tornado Cash despite it being sanctioned, basically showing you how to get around sanctions. I mean, videos like that surely should be illegal, right? And it just makes me wonder if these sanctions have any teeth at all. If you ever hear of anyone who gets arrested for violating the Tornado Cash sanction, please tell me. I would love to know. Because what's the point of all this if the government isn't going to enforce the sanction at all?

1:17:12Because it almost feels like the government is powerless here. It has no ability to stop or control cryptocurrency or from people using apps like this. This is what permissionless money is like. And I don't see any evidence that the government is even trying to enforce sanctions. The sanctioned code is still there on GitHub. YouTube happily hosts videos on how to avoid sanctions and still use tornado cash. What is happening here? Just a month ago, the SEC approved the Ethereum ETF. This means you can buy this stock on the regular stock exchange and they'll buy ETH for you. It's a way to invest in Ethereum without actually holding Ethereum.

1:17:55So there's this wallet out there, which holds all the ETH from this ETF. Well, guess what? As soon as the internet figured out which wallet is holding the money for the ETF, someone sent a whole ETH token worth over$3 ,000 through Tornado Cash and then to the ETF wallet, which in my opinion means the wallet is now violating sanctions and can no longer buy or sell on an exchange. They did it to protest these sanctions. to show that there's absolutely no way to enforce this. And I guess this means Tornado Cash won. There's no way to stop it or to stop people from using it. And so today, there's still millions of dollars flowing through Tornado Cash.

1:18:42It's gone down. Don't get me wrong. The amount it's processing has gone down. And therefore, it makes a less efficient mixer. You want your mix to have lots of liquidity, lots of volume going through. So the less it's used, the less efficient of a mixer it's going to be. However, it is now a criminal mixer. And so, you know, it's a sanctioned mixer, according to the US government. And so anybody who uses it is going to be a crook. What that means, of course, is if you use Tornado Cash, you're going to really struggle to send the money onwards. Because whoever sees money coming at them from Tornado Cash is going to go, no way I'm going to accept that.

1:19:19unless it's somebody who doesn't care about dealing with sanctioned entities, in which case, you know, you're in a slightly murky world. It is a very murky world. Because let's say, hey, I'm selling something online, and someone's like, I'll buy it, and they send me the cryptocurrency that's been mixed through Tornado Cash. Am I supposed to say, wait a minute, before you send me the money, let me analyze your wallet to make sure it doesn't have any sanctioned crypto in it? This is bonkers. This is like running the serial number on every dollar bill you ever get to see if it's ever been used by someone who's been sanctioned in the past.

1:19:54That would be a nightmare to have to do. Yet that's what I feel like we have to do from now on. Yeah, so suddenly I'm wondering why the U.S. is even involved, right? So Axie Infinity is based in Philippines. So I could see the Philippine police being upset. Vietnam. Vietnam. and okay, so I could see the Vietnamese being like, all right, we got to sanction this because we don't have any other way, right? And then you've got the creators of Tornado Cash. They're not US-based, are they? Yes, Roman Storm is based in the US, but actually at the point where they sanctioned it, I don't think that had been confirmed.

1:20:34And look, with sanctioning, sanctioning is a really interesting power in that basically anytime money transfers across the US, the US can exert control in terms of sanctions. So it's extremely difficult to avoid if the US government wants to go after you on sanctions. It's extremely difficult to avoid that. The US government's argument is, look, there would be US users using this service. Money transactions would have gone across the US territory. Also, as far as I'm aware, the sanctions dodging accusations that the US puts at the foot of North Korea gives the U.S. government huge scope to go after it around the world.

1:21:12Wherever North Korea tries to dodge sanctions, it seems the U.S. government can go with its sanctions legislation. So, you're right, it seems odd, but in a way, it doesn't surprise me at one job that the U.S. has managed to try and do this. Right, I don't know if there's the word trad cry, but traditional crime is based with people in countries, and those countries can deal with that or whatever. And here we have a new kind of crime, which is there is no boundary. There is no country. There is no head of some company. There is no person controlling the code. I don't even know if it is a crime.

1:21:48Like, we haven't even established that. There's laws that are established to avoid money laundering that may have been, I don't know, what's going on. Like, it's another person in another country that did it, right? But this is why sanctions are such a useful weapon and why the U.S. is resorting to them more and more. We've had Bitcoin fog. There was a prosecution in that case recently, another crypto mixer. This is why the U.S. government is using them. We can't nick these people. We can't lock them up and put them in handcuffs most of the time. We can use, frankly, financial warfare. This is what we do now.

1:22:22Financial warfare? We can't police the code. We can't police the people. But it's all about money. So we are just going to use that sanctions power, which is a really big, broad power to use. As soon as I started seeing this and I started realizing what was going on, I said, oh, that makes perfect sense. You know, you've got so few weapons to bring to the battle, but you've got this weapon and it's really good and you can use it wherever. It makes perfect sense. And, you know, as I was researching this episode, I saw more stories like this. Another privacy service just like this called Samurai Wallet was also shut down by the U.S.

1:22:54federal authorities. and the people who started it were arrested. This was a coin join on the Bitcoin network, which isn't the same as the smart contract system, but it is autonomous system and it's non-custodial and it was also open source. And here you have people who have contributed to an open source project who are getting arrested because the feds are accusing them of running an illegal money transmitting service. And as my eyes become tuned into this, I'm seeing more and more stories like this. The Phoenix wallet decided to remove themselves from the app store, not saying a reason why. Ibex Pay is shutting themselves down, not saying why either.

1:23:28MetaMask received an enforcement action letter from the SEC, and they're countersuing the SEC over that. Something big is going on here. Privacy advocates have fought the government in the past before, and won. The story of Phil Zimmerman comes to mind. Phil created a fantastic encryption program called PGP, which allowed you to send an email to someone encrypted so only you and the receiver could see what was in it. Yeah, well, the U.S. government hated this kind of encryption that gave us privacy. Encryption? That's only for the military. How dare civilians try to use it? So they classified PGP as a munition, and they called it a regulated arm, as if it was a weapon, which allowed them to say, Look, Phil, unless you get an arms export control license, you can't go distributing encryption code online.

1:24:17Because, you know, what happens if criminals use it? They could hide their communications. Nobody wants that, right? The FBI began investigating Phil. Well, the privacy community was outraged that the government was restricting us from encrypting our own messages. And they started being vocal about how important privacy was. Someone suggested to Phil that he should publish the PGP code in a book. And Phil's like, what? Why? It's a program. It's code. Just download it online. Jeez, if I were to put it in a book, it would take 800 pages to print it. But the thing was, books weren't considered regulated munition.

1:24:54Books were protected under free speech law. So if he were to publish the source code in a book, that would give him protections that what he's written is just words and not, in fact, a regulated arm. So he published it in a book, and it was 800 pages of code. Well, enough people voiced their support for encryption and privacy that the government finally gave in and let Phil off the hook and even took encryption off the regulated arms list. It was a big victory for our privacy. And thank goodness, because encryption is inherent in everything we do online now. Even what you're hearing right now, this podcast was delivered to you encrypted so that anyone who intercepted the packets along the way wouldn't know what you're listening to.

1:25:33It would have been illegal for me to use encryption on this podcast in the 90s without an export license. I did a whole episode on this, actually. That's episode 12 called Crypto Wars. What Phil showed us is that code can be printed in a book, and if it's printable like that, it's protected under free speech. And so once again, it's unprecedented that the government would put a sanction on code, which has always been free speech. Until now. Until now. I don't know. The crypto space is so complex that if I send it to your wallet, and you send it to my mom's wallet, and she sent it to my wallet, and then I sent it to the exchange, Is the exchange going to know that still came from Tornado Cash?

1:26:16Very good question. And that comes down to how much liability the exchange has. So in the situation you described there, that's what, four hops? I think, given that cryptocurrency tracing is fairly well developed, I think the authorities would say, well, hang on, you should still have known it came from that. But if you're talking about 100 hops or 1 ,000 hops, maybe that's enough hops that the authorities say, well, yes, you had no way of knowing this back in the day. transfer it to Polygon and then back to ETH. And now you've got a new wallet. And I don't know if that's traceable. There's just a lot of ways to get around that even still.

1:26:51Now you're thinking like a money laundromat, Jack. That's what I hoped we'd get in this conversation, where you finally... That's what the book's about. Yes, the book. Jeff has released a book called Rinsed, which goes into the modern ways criminals are laundering money. It's full of things that make you think about the new future that we're facing. I deviated quite a bit from it here, but what Jeff told us today was a single chapter from the book. So you can imagine how much more you learn from getting this book and diving in. So go read Rinsed today and let me know what you think of it. And I'll leave you with this very important warning from the FBI, which was issued April 25th, 2024.

1:27:29This is PSA I-042524. The FBI warns Americans to avoid cryptocurrency money-transmitting services that do not collect your name, ID, address, and other personal information.

1:27:46To me, this is akin to the FBI advising against driving on roads without license plate readers or walking on sidewalks without facial recognition cameras. It's like being told not to wear sunglasses on a sunny day or to avoid using curtains in your house. By cautioning us against privacy tools, They aren't just infringing on our rights. They're asking us to live in a glass house, exposed and vulnerable. This isn't just a warning. It's a push towards a future where privacy is a relic of the past. Is that the world we want to live in?

1:28:34A big thank you goes to Jeff White for sharing this story with us. You can find a link to his book, Rinsed, in the show notes. Go check it out. This episode was created by me, the firewall fidgeter, Jack Recider. Our editor is the router rigger, Tristan Ledger, mixing done by Proximity Sound, intro music by the mysterious Breakmaster Cylinder. I was moving my stuff the other day and I had to carry my computer down some stairs, but I dropped it and it tumbled down the stairs, smashing itself to bits all the way down. At the bottom of the stairs was just a big mess of broken parts. The only thing that was salvageable was a stick of RAM.

1:29:09So at least I have the memory of it. This is Darknet Diaries.