I think you are few years behind from current state of the ecosystem. You can easily go from Eth -> renBTC (on Ethereum) -> BTC (on Bitcoin chain). None of those steps require KYC/AML or any kind of registration. You can move 100s of millions of dollars that way with very minimal slippage or fees.

It is very easy these days to go between Eth <-> BTC without any KYC/AML.

Do you really have to launder them? I mean, you do as the smart contract says, it might not even be illegal.

In most cases yes, at some point the attacker will want to turn his tokens into cash and at that point he is at the mercy of centralised services who gets to decide.

Here's an old computerphile video: https://youtu.be/UlLN0QERWBs

Etherscan provides such a service for ethereum: https://info.etherscan.com/ethprotect/

As long as there are enough centralised services with enough volume that agree such tokens are tainted the decision is effectively made for the entire ecosystem.

Just turn it into Monero or Zcash and take out via crypto ATM.

Legally, intent matters, a contract is above all "a meeting of minds", and the technical nuances of what exactly the smart contract says only matter if it helps to establish what exactly that intent was - if the contract result clearly does not match the intent (or if the intent is invalid e.g. the contract was written with an intent to deceive) then what the contract says can/should be overridden.

Just as in real life getting someone to sign on the dotted line with the intent to cheat them is fraud that can invalidate the contractual obligation, technical exploitation of a smart contract is the same. As you say, it might not even be illegal, details matter, but it might also well be a felony.

Everybody thinks "we don't need laws, we let the smart contracts handle it" until their smart contract is exploited and their funds "robbed."

Have any of the smart contract exploits actually been litigated in court, even if unsuccessfully?

I don't think "everybody thinks" that. Smart contracts just give you an alternative set of risks which might be more useful in certain circumstances. They are also not immune to having legal consequences either.

Fairly straightforward in Ethereum to break a audit trail via services like tornado.cash etc.

The biggest problem wouldn't be breaking the chain but the final step of cashing out. A regular exchange requires KYC for large amounts. Although P2P Crypto/Cash exchanges exist (local{bitcoins, monero}) most simply don't have the volume and still leaves the question of where the money came from.

Why is it harder to launder eth? You can just exchange them to monero on a non KYC exchange.

KYC exchanges don't really exist anymore because they were abused in 2017 and thus either forced to close or comply with regulation (such as the wannacry ransomware virus, in which the criminals laundered their BTC into monero on shapeshift, which at the time had no KYC). Second, cross-chain exchanges may not be possible in a fully trustless manner.

wrong and wrong of course.

Shapeshift just DROPPED its KYC.

https://erikvoorhees.medium.com/no-more-kyc-with-shapeshift-...

>Second, cross-chain exchanges may not be possible in a fully trustless manner.

Monero <-> Bitcoin atomic swaps (codename: farcaster) are coming later this year. In the mean time, you can use Bisq.

read the whole thing. KYC only dropped for ERC 20 transactions , which uniswap already does and is not the same as a cross-chain transaction. The abiltiy to exchange erc 20 tokens is native to Ethereum.

expect them to drop KYC for other transactions as soon as the technology becomes available to do so

It's not harder. This person doesn't really know what they're talking about.

Even easier than that. You just send the funds through tornado.cash.

> the problem with defi hacks, from the perspective of the hacker, is you get a bunch of eth, which is a lot harder to hide and launder than BTC.

Actually it's quite easy with something like tornado.cash.

It's more of an exploit than a hack, each smart contract by themselves worked as intended but the system as a whole could be exploited.

Bitcoin does not have tornado.cash

Why would it be harder to launder? The average bitcoin transaction is up to 17 USD, even combining addresses or tumbling is going to eat into your balance.

eth uses an accounts model instead of the UTX model for transactions. Tis makes it much, much easier to trace payment flows.

Fairly sure that's not true. The two are equivalent, one is easier for humans to reason about but for a computer they're isomorphic (I assert).