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When you are browsing regular WWW through Tor last node's (exit node's) IP is known to the server, also exit node's ISP can observe the traffic.

So if somebody is browsing sites with illegal content (for example child pornography) and you happen to be the last node doesn't it seem to authorities that you were doing this and not said person?

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    My exit policy excludes port 80 for just this reason. – Michael Hampton Nov 29 '13 at 5:56
  • @MichaelHampton what if they use port 443? – bastik Nov 29 '13 at 16:07
  • Should it be clarified that "ISP" refers to the ISP of the exit node and the server, not the ISP of the user? – bastik Nov 29 '13 at 16:08
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    Also shouldn't the title be "Can running an exit node ..." instead of using it, what would be another valid question. – bastik Nov 29 '13 at 16:12
  • @bastik As a rule, traffic to port 443 is encrypted and the exit node (and the exit node's ISP) cannot see its contents. Thus, even if there is illegal content, there is no reasonable way for either the exit node or the ISP to know it. – Michael Hampton Nov 29 '13 at 18:06
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Yes, that is a distinct possibility.
To prevent this the Tor project recommends a range of actions to make it clear you're running an exit relay; for instance informing your ISP. You can read a blog post regarding this here.

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If you're referring to a scenario where you are using the same exit node as someone doing illegal activity is using, no. You'd be safe, because an adversary watching the exit node's traffic would only know what was sent from the exit node, not who sent it. So long as you're not de-anonymizing yourself, (Ex. logging into sites associated with you, using a credit card which is in your name, etc.) you'd be fine.

If you're referring to a scenario where you're running a Tor exit node, and someone did something illegal from it, that depends on the laws of where you live. However, Tor exit nodes shouldn't be run from your home, and they should clearly identify themselves as Tor exit nodes. (take a look at a Tor blog post about exit nodes for some more information on that)

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