Samourai wallet case analysis

Most of the reasoning would apply to a Grin mwixnet service as well. The mwixnet only accepts self-spends and never has any control of the funds.

The mwixnet developers would be wise though not to operate the service for profit while marketing it as a sanction evasion tool, which the samourai devs are being accused of.


What would be the lessons we can learn from it, that those who run a Grin mixer are fair game/targets?

Would making Grin mixer transactions an opt in be best? On the long run probably the opposit would be best, every node is a mixer, so no one in particular should be a target. But would making it default hurt adoption? So many angles to consider.


Probably this is just a FUD attack to push crypto markets down. No way this stands in a court.
Technology is neutral and always will be. Otherwise we could charge every scientists since many inventions can be used to make weapons of mass destruction (e.g. Oppenheimer). They could as well charge Phil Zimmermann, or any of the zillion programs and service providers that use PGP encryption since in theory it could be used for terrorist activities.

But there’s little sense to attack mwixnet the same way as Samourai service, because the outcome of the attack is… Nothing? You can’t shut down it and you can’t seize anyones funds.

Any operating mwixnet must provide a server IP address which can be traced back to its owner and, depending on jurisdiction, shut down. I believe Iceland helped shut down the samourai servers.


Maybe my understanding how mwixnet works is wrong, but my assumption it will be a set of distributed nodes, so you can shutdown everyone in US or EU jurisdictions, but you can’t do it in other countries if their governments don’t pursue privacy tech. So you will not be able to shutdown the whole mwixnet and it will continue to work.
There will be needed a collaboration of all jurisdictions to ban mwixnet in all countries. We can compare it with tor network, where it is banned to use in some countries, but others still providing the service, so it’s functional.

For a single mwixnet to work, all of its nodes must continue working.
You could however have a collection of mwixnets to choose from, which does provide some redundancy…

I’m not really clear how mwixnet service works, is it a higher layer of Grin? Can we embedd this service in grin node itself?

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that why i said mwixnet need to be default native at base layer or else it becomes a mixer and shuffler (well it it lol)

if coin swaps are not mandatory default at base protocol layer it will not work in the long run
they are even coming for self custody

yes and yes if its not mandatory default at protocol base layer it will not work

grin as confidential transaction already its a privacy coin so what adoption are you talking about

it need more DEX and p2p trading options

yes grin need meta data level privacy (network level privacy by default)

same with coin swaps it need to be at protocol layer with network level privacy

A coindesk article says

As far back as May 2019, the U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN) has been concerned about cryptocurrency “tumblers,” finding that that “persons who accept and transmit value in a way ostensibly designed to protect the privacy of the transmittor [sic] are providers of secure money transmission services and are not eligible for the integral exemption.”

In other words, mixers are money transmitters, even though a person is generally only transmitting funds between two addresses they control to anonymize their funds. And if you’re deemed a money transmitter, FinCEN noted, you’re expected to comply with the Bank Secrecy Act.

Does that mean that any attempt to obfuscate the transaction graph, such as adding decoys, makes you a money transmitter?

[1] Samourai Wallet Charges Raise Existential Questions for Privacy Tech

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Someone could extrapolate this further and say that Monero network is just a huge mixer for money laundering.

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they will even go after self custody wallet with send and receive function as money transmitter

coin swaps need to be on chain at base protocol layer by default mandatory or it will not work and will be called as a mixer and money transmitter
heck even self custody wallet with send and receive will be called as money transmitter at this rate

Regarding the Bank secrecy act, they require anyone to file:

A currency transaction report (CTR) reports cash transactions exceeding $10,000 "
"“foreign financial accounts” with an aggregate value of $10,000 or more are required to file a Foreign Bank Account Report (FBAR) "
" A MIL must indicate cash purchases of monetary instruments, such as money orders, cashier’s checks, and traveler’s checks valued between $3,000 and $10,000. This form is required to be kept on record at the financial institution for at least five years, and produced at the request of examiners or audit to verify compliance."

Mots requirements have to do with transactions within a certain value range. For Grin all these rules in their current format are not applicable and technically not possible since amounts are always unknown unless you are the sender or recipient in the transaction. No amount are known anywhere in the aggregation process, so there is no way to know if a transaction should not be aggregated. Basically it could be argued it is just “data aggregation” since no piece of that data has any distinguishing properties.

The only obvious caveat is strict checks at the door/exchange level.
Regulators already apply strict AML and KYC rules to customers who might want to exchange coins with high privacy preservation including Grin.
Worst case scenario would be that coins that have been aggregated cannot be sold on most exchanges since they have no means prove their origin. @grinmonk If that worst case scenario would play out, it could hurt adoption if mwixnet would be implemented as a default and not as an opt-in. But this would only happen in a case of regulators overstepping.

Looking forward to your design for that, since I have no idea how that is even possible while preserving Grin’s scalability and ddos resistance…

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@tromp how difficult is it
is the current protocol not compatible
can a clean and simple version of MW with default coin swap not possible

they are coming after self-custody wallet next

No, new FATF regulation that will come in effect aims at centralized custodial wallets. True peer-to-peer transactions and decentralized PoW projects are left out.

If I’m not mistaken the new legislation even mentions literally peer-to-peer transactions up until $1.000 won’t face any scrutiny. They know well they can’t enforce this nor can they track every transaction. It would be like aiming at a mosquito with an elephant gun.

Big centralized exchanges with fiat on/off ramps will have to apply to strict KYC/AML laws. DEX and crypto-to-crypto CEX will operate in a grey zone.

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