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Tornado Cash and collateral damage

Tornado Cash and collateral damage

Posted Aug 20, 2022 13:00 UTC (Sat) by gmgod (guest, #143864)
In reply to: Tornado Cash and collateral damage by Cyberax
Parent article: Tornado Cash and collateral damage

> If the Fed operated a "tumbler" - a special account where you could send money and retrieve it as cases of banknotes without any questions or limits, then you'd have a point.

That's called a bank. Sure is you are an individual (and not a company), you might get a few questions but ultimately if you decide to remove all or part of your money, they have to honor it. Banks are legally your debtor: they owe you the amount that is written in your account and they'll gladly fetch it from that big bag of mixed money they have somewhere. The fact they have to legally ask a couple questions to you does not change that.


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Tornado Cash and collateral damage

Posted Aug 20, 2022 13:41 UTC (Sat) by Cyberax (✭ supporter ✭, #52523) [Link] (1 responses)

> they have somewhere.

This big bag of money must come from vetted and identified clients. Banks can't get anonymous money donations.

Sure, it's not perfect and sometimes crooks can steal identities or corrupt bank branch managers. But as a bank client you can be sure that the bank has done all reasonable precautions.

Tornado Cash and collateral damage

Posted Aug 30, 2022 1:20 UTC (Tue) by sammythesnake (guest, #17693) [Link]

Getting drastically off-topic, but actually banks don't really have a "big bag of money", almost all of their assets are actually debts owed to them.

To make that already squicky fact more disturbing, the money lent out generally never existed in the first place. Providing the value of the debt plus collateral (i.e. the back that hand you a mortgage now owns your house) covers the "money" given out (plus the costs of recovering it), the books balance without the money existing in the first place.

There are regulatory controls that require the banks to have some *real* money deposited at Central Banks but at multipliers that make it almost meaningless, even post 2008 :-(


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