“Anybody who thought about this for a second understood that law enforcement was working on a case against BTC-e,” said Jerry Brito, executive director of Coin Center. “The question was just whether the government would catch them.”
sorry i didn't clarify in my first post but by "exchange", i mean a place where there is 1 orderbook that every participant uses and transactions are done automatically, rather than some ad-hoc system where participants transact between each other.
How are you going to do transactions automatically when you can't send your money to one place? Whose bank account will your USD end up in so you can get some balance in this system?
This is what I never understood about bitcoins's reputation, especially earlier on, about its supposed anonymity. I suppose that's much less the case now. But it always seemed odd that people considered it at all anonymous when the blockchain kept a record of everything. Sure it might not be immediately identifiable with a specific individual, but unless it was a wholly closed system, entry & exit points would always be clear, along with all the hops from wallet to wallet along the way.
And the longer the system exists, the more information will accumulate that would allow anyone with an interest in doing so to correlate blockchain transactions to "real-world" people & systems.
I'm sure I'm missing something though, since I'm by no means a cryptologist, or more than an interested spectator on crypto-coins. (I mined about 0.1 bc back when it was still possible to do that in a week or so on a mid-range AMD GPU. and, shocked at the rise in value, cashed it in for about $200 a few years ago.)
Not really. The transactions are very far from anonymous. You don't have to attach your real name, which makes it pseudonymous. Cash is actually anonymous (assuming no serial number tracking).
It's privacy. Money laundering is a fake crime and propaganda by governments with prosecutors unable to find real crime.
It's as bad as calling copyright infringement "theft" or even "piracy", though the later term has been pretty watered down. Or how banks push the idea of "Identity theft" as if someone stole your identity versus the bank failing to verify your identity.
We don't call encryption "information laundering" and niether should simple financial privacy have any negative term.
Nah, I was charged with other crimes (none of which had a financial incentive, according to LE or the courts).
While at it they "subpoenad" my bank account history, saw a bunch of wires from normal European exchanges and then one wire from a Chinese account. Never cared to ask about the European ones (I verified that they didn't ask the exchanges directly either.), but the Chinese one was apparently particularly interesting.
They asked me a few questions, I explained the (legal) source of the money, few years later the thing actually got to court and I was found guilty with the only evidence against me being the country where the funds came from.
Not worth it to appeal, I might get my 6-7k euros back but would probably end up paying more than that for lawyers.
50700 counts of aggravated unauthorized access to computer systems for making some scripts to drop a bot on lots of coldfusion site. Incl https://news.ycombinator.com/item?id=5552756
I realize now that I somehow misparsed your comment as saying that you had been charged for other crimes as a result of that transaction, but when rereading it now, the causality is actually in the opposite direction. I guess once they had a solid case for one, they just threw in everything else they found suspicious? Thanks for being so open.
There wouldn't be a second transaction (the front store) if it weren't for trying to pay taxes on the first. So that's not really a defensible line of reasoning. Only, perhaps, if the tax rates would differ.
Sure, so if you want to use circular logic to say the real crime of money laundering is tax evasion, when money laundering actually results in more taxes being paid, that's fine. But don't expect that to be a persuasive moral argument for making money laundering a crime.
I didn't say the real crime of money laundering is tax evasion. The real crime of money laundering is obstruction of justice. But taxes are certainly being evaded, too.
You are paying some tax, just not all the required tax. Specifically you are evading income taxes. As I recall in the US at least, there is an option on your IRS form to report any income derived from illegality so that the relevant tax can be paid. Whether anyone has ever done so I don't know but something like that could have kept Capone out of prison.
If you illegally sell $10 worth of drugs, then record your front store of selling $10 of Tylenol (that you don't actually buy or sell) then the $10 of drug money has been fully taxed.
There's taxes from the supply chain of Tylenol that don't get paid when it's $10 in illegal drugs that are actually sold. Much like Bitcoin, with a black market you can only tax at the egress points when the money needs to touch a regulated financial entity whereas an all-legal system can tax any time money changes hands.
People go to prison for it all the time. It's as real as any other crime.
If you are acting in a way that's indistinguishable from someone who is attempting to hide evidence of a crime, don't be surprised when people think you are doing something wrong.
I mean it's a made up victimless crime that only serves prosecutors. It's on the moral level of asset seizure and worse than "crimes" like wire fraud.
Prosecutors are free to think someone's doing something wrong. Investigators might be able to get warrants under such suspicions (iffy but perhaps acceptable). But they should need to find actual wrongdoing to be able to convict people, and this last part is what is lacking today.
It is only money laundering if is done with money that is the result of a crime.
Just like a trader is only a fence when he trades stolen good.
Therefore, by definition, money laundering is assisting a crime. If the crime had a victim, then, by proxy, laundering the money of the crime is not victimless either.
This is absolutely not true, at least in the US. If you are a business that transmits even 100% lawful funds without registering with FINCEN and registration as a MSB in your jurisdiction, you can and will be charged with money laundering.
Also, using your argument about money laundering, what about a restaurant that serves mostly mafioso, but never engages in any unlawful activity themselves. They are providing food to criminals, which is even more critical to their criminal enterprise. After all, the mafia can't commit crimes if they can't eat, right? And they are paid with funds that result from crimes. By your analogy, the restaurant owner is assisting in a crime. So should that restaurant owner be charged with some kind of new crime? (like money laundering is a relatively new crime that has been created over the past 50 years) Like, criminal gastronomy, feeding in the 3rd degree, or something?
Simply not true. Look up Hawala, a money transfer system that's been around for over 1000 years. Use it in the US and be prepared to deal with money laundering charges, regardless of the lack of crime. Or just try having your small business make repeated $9000 deposits of completely legit and clean money.
Money laundering is now about not reporting all your financial movements to the government. It's surpassed the even controversial idea of using it against criminals in lieu of real crimes.
> If you are acting in a way that's indistinguishable from someone who is attempting to hide evidence of a crime, don't be surprised when people think you are doing something wrong.
Do you apply this kind of reasoning to encrypted communications? If not, why not?
From the utilitarian perspective, what is the point of financial privacy (from the government)? It looks like money laundering and purchases of illegal substances seem to be the biggest "benefits". Those are benefits that aren't beneficial to the government or the people that are governed.
Spending habits can reveal a ton of information about a person. At that point, financial privacy has the same justification as encrypted communication or any other kind of privacy: protecting people from Government overreach. Knowledge is power.
Money laundering requires the intent to conceal the origin of proceeds from certain specific unlawful activities or to avoid financial reporting requirements. Hiding the origin of lawfully obtained money is legal.
This is not true. There simply doesn't exist any court that'd accept your justification that your service is only intended to conceal the origin legitimately obtained funds.
This is absolutely not true, at least in the US. If you are a business that transmits even 100% lawful funds without registering with FINCEN and registration as a MSB in your jurisdiction, you can and will be charged with money laundering.
That would only be if you used the tumbler for the purpose of avoiding financial reporting requirements.
Simply using a tumbler is not illegal.
For instance, if someone used legally obtained money to buy bitcoin, put them through a tumbler, then used the bitcoin to buy drugs. That would not be money laundering because it does not hide the proceeds of a crime or avoid any financial reporting requirements.
On the other hand, if the drug dealer took the bitcoin that they were paid with and put it through a tumbler, that would be money laundering because they would be hiding the origin of the proceeds from selling drugs.
It's the difference between pseudonymity and anonymity. Saying that I've transferred B bitcoin to identity A doesn't tie that identity to a "real" person, it just says whoever holds A's identity (secret keys) can do other transactions with the bitcoins A holds.
In practice this gets complicated as some exchanges require a valid government ID (drivers license say) and that's why these so-called "tumbling" services sprung up. The idea is that, for a small fee, you put X bitcoin into a pool with other people, and get (X - eps) back out and put into another identity of your choosing (eps being transaction fees). As long as the tumbling service doesn't get compromised so that the destination address can't be tied to the source address, this allows for a level of real world identity protection.
Presumably even sending bitcoin from an identity that's tied to your meat space identity directly to another identity that you create provides a layer of protection.
> Presumably even sending bitcoin from an identity that's tied to your meat space identity directly to another identity that you create provides a layer of protection.
But then any transaction from your second, secret identity that compromises you will retroactively compromise all other transactions made from that identity. Your opsec has to consistently be perfect.
This is true, which is why it makes sense that one would throw away one's secret identity (and creating another) after each and every transaction to mitigate agaisnt this.
Not to say one is in the clear even if they do such, because as some say, metadata kills…
This is a problem with the internet in general. In the future, we will have an archive of everything everyone did on the internet and can use stylometry, Facebook likes and clicks, and temporal association to uncover individuals. The only way to opt-out is to just stop participating.
All newer cryptography based systems for preserving privacy, like ZCash and Monero, are based around elliptic curve math that will one day be broken. As with 4chan or reddit, the belief that one is anonymous can lead one to engage in riskier or more controversial activity. This is at risk of being uncovered in the future, with potential for damage to the individual.
How soon is that day when elliptic curve cryptography will be broken? AFAIK RSA is still mostly unbroken and it has been decades. EC could last 50 years or 500 years, right?
And if one were to, say, take some transparent ZEC, send it to an invisible location, then take it out to a transparent location and do the same again to a third transparent location (to then convert to bitcoin or whatever)... EC would have to be totally completely broken to figure out the private keys of all three transparent addresses (not just weak in the sense of $1B of GPUs can reverse find one key in 6 months). And still you don't know who those addresses belong to (and haven't broken the invisible part to know where the coins that went to the second and third address came from), right?
Actually, i think the walled garden internet will collapse spectacularly, as any mono-culture has done before- beeing prone to viruses and attacks.
Linux and Open Source might be the users last choice, but might be the last man standing one day- if for example sb would write a maschine learning virus able to detect and exploit new weaknesses in a dormant form.
10 years, at most. Google is seeing to production-ready QC within the next 3 years for specific applications. Factoring elliptic curve point multiplications is log(n) with QC, so once the cat is out of the bag decrypting a large dataset should be trivial.
Bitcoin was not designed to be anonymous but this seems to be really difficult to grasp.
You don't even have to scratch the surface of Bitcoin to learn that at its core Bitcoin is a distributed ledger, powered by the "blockchain" which is open book for anyone to follow every transaction ever made. This is not a separate tracking system, it's the very fundamentals of how Bitcoin is able to function and it makes no effort to attempt to keep its users anonymous.
I can only conclude that claims Bitcoin is anonymous when compared to cash is either propaganda or ignorance.
Bitcoin can be anonymous. All you have to do is mine the coins while you are on an anonymous internet connection (such as tor and a public wifi hotspot).
Another way for bitcoins to be anonymous is to use a "mixer". If you send your coins to a very large wallet (that contains a lot of money owned by a lot of other people), and then whoever controls that wallet then distributes those coins to a bunch of other newly created addresses (which you control the keys for), then there would be no way to tell whose money was sent to those wallets. It might be your money. It might be a thousand other people's money. This is called bitcoin laundering.
Transactions are always traceable, though. People might think their bitcoins are safe and anonymous, but then they use their own personal computer on their own personal internet connection to actually spend the bitcoins on something illegal. Guess what? News flash! The NSA and who knows how many other government agencies have been monitoring internet traffic since the 90s! Ever heard of Carnivore? How about NarusInsight? Do you honestly think they can't track P2P traffic? Do you honestly think that your P2P bitcoin spending transaction can't be traced back to your IP and to your address? They can probably track a lot of Tor traffic, too.
The only way bitcoin is anonymous is if someone keeps every single step of the entire process anonymous. Mining/purchasing has to be anonymous. Storage has to be anonymous (no third party wallets). Using an exchange has to be anonymous (good luck with that). Selling the coin (or purchasing something with it) has to be anonymous. The chain is only as strong as its weakest link, and each link has many potential attack vectors.
For example, you might think you are using a perfectly safe bitcoin "mixer" service, but for all you know, the feds are actually the ones operating the mixer service, and are tracing every single transaction from start to end.
So yeah. The long and short of it is that Bitcoin is heavily monitored and traced, which is why the government allows it to exist.
0.1btc was only worth approx $200 in the last 12 months so I am not sure how you sold 1/10th of a bitcoin for $200 a few years ago because 1 bitcoin would have cost approximately that.
Monero[1] was created, among other reasons, to solve the privacy problem. It uses something called a ring signature[2], which is composed of a group 'decoy' public keys, plus yours, as part of every transaction which makes it impossible for an outsider to trace. Monero is fungible, whereas Bitcoin is not.
That is why I have embraced it. I never liked the features lacking from bitcoin. And when the anonymous coins like monero and zero coin came out even then it took me a while to research and embrace one. Monero was what I settled on. I like cash because it's untraceable. I like Monero because I can carry out transactions in private and anonymously. It's no ones business what I do with my money including governments. I have always felt that way. Time will tell wether Monero's ring signatures and other privacy features hold up. But for now that is where I park some of my assets.
As I understand it, Dash doesn't aim to provide privacy in the way that Monero does. The goal of the Dash project seems to be to improve the usability of cryptocurrencies. Both projects, IMO, are doing good work and have their place in the cryptocurrency space.
1. Monero's transactions are private by default. In Dash it's optional (and slower).
2. Dash is basically a coin join, working like a Bitcoin mixer. This means you can still gather some information from the mix given enough analysis. It's different compared to Monero where you cannot tell which of the possible inputs is the right one. The security is based on probability and cryptography instead of obfuscation.
3. Monero hides both the addresses of the transaction and the amount. In Dash the transaction amount is open and analysis could correlate the obfuscated sending and receiving addresses.
4. The mixing in Dash is performed by "masternodes", a subset of all nodes, and if compromised they can break the privacy. Particularly scary after the recent Bitcoin mixer shutdown. Monero contains no such third party weakness.
All in all the anonymity of Dash is a joke compared to what Monero gives you.
1. There are no mobile wallets, multisig or hardware wallets. Now all of these are in the works and hopefully ready this year.
2. Very little effort has been spent on marketing compared to other coins (for example Dash). The biggest reason is that Monero is community funded and it's not possible to use a share of the developers share of coins, as there isn't one. This is compared to the marketing in Dash which has been fueled by the instamine. Focus has instead been placed on developing the fundamentals.
In fact it's a bit surprising that Monero has had the popularity it has. The official GUI was only released relatively recently and before then you were sort of forced to use the command line client.
When all the exchanges have KYC then it will be hard to hide from the law with Bitcoin. For example you buy $1000 of bitcoin on localbitcoins. But that guy is just a trader who buys them from an exchange. You do something nefarious with the BTC and they trace it back to an exchange transaction, to the seller who gives you up.
The charges seem exaggerated. If he's responsible or directly involved in the Mt. Gox theft, then they should prosecute him for that. The referencing of Internet usernames as evidence of crimes indicates they have a weak case or they're using it as public relations campaign against bitcoin.
The price of Litecoin was usually higher on btc-e I think solely because people would deposit btc and buy ltc as a way to hide the source of their coins. It was widely considered shady but trustworthy by its longevity.
These domain name seizures from non US-resident entities keep coming.
But more worryingly, "The language in the indictment about BTC-e’s “criminal design” mimics the indictment against Liberty Reserve".
This also mimics the Kim DotCom / MegaUpload take down, along with a likely "FBI" operation in a foreign country.
It seems there is now a policy of taking down things that are "criminal in design" - waiting for the next raid on "criminal in design" encryption software...
What are those. I have claimed here and will repeatedly do so -- there are none. I mean, sure, there are a few companies which integrate the sell-your-bitcoins-buy-our-product in one go but the volume of that is near irrelevant. And no, international transfers do not count as a usage because not only the sender needs to buy bitcoins the seller needs to sell them too...
You mean, what are legitimate uses for decentralized internet cash? Besides everything that physical cash is good for, plus many more uses made possible because you can send money without exchanging physical tokens?
Very bizarre to state the obvious use cases, then nullify it with handwaving.
The current cost to move $10m of bitcoin across international borders is about $1. Attempt the same via conventional means and you'll quickly realise it's benefits go beyond monetary efficiency.
As for current working use cases Factom[0] stores an auditable timestamped data trail in a merkle tree structure, which is then anchored into the bitcoin blockchain.
This is a tech minded site, I would hope people here understand the value of immutability. Real immutability, data that can't be altered or undone in anyway.
Many seem upset at bitcoins meteoric rise and the rampant speculation for good reason, but make no mistake blockchains will be around long after we are gone.
You don't, as a rich person, want to have all your assets in a single jurisdiction. You want to spread them as far as possible, for multiple reasons, and for this you need a cheap transfer way:
- resilience against political "changes" (esp. China, Russia); money that is under foreign, unaffiliated regulatory regime cannot be seized by authorities at home
- taxes: you want to secure your cash/assets from sudden taxes on property/equity
- resilience against a bank going literally bankrupt. this happened in the financial crisis, even in the EU, and one bank's customers IIRC lost everything above 100.000 € on their accounts.
Also, if you run an international business with regional offices or such, you don't want to spend huge amounts of both time and money when transferring company funds or buying machinery from vendors in other jurisdictions.
> The current cost to move $10m of bitcoin across international borders is about $1. Attempt the same via conventional means and you'll quickly realise it's benefits go beyond monetary efficiency.
I'm fairly sure the cost is close to 0 for eur using SEPA. I've also transferred chf and usd across borders with no fees.
FX fees are different (around 0.01% with a decent broker?) but I suppose BTC spread+commission is higher than that anyway.
And, yet, it cost me eight bucks to move a few hundred bucks from Coinbase BTC into USD.
Also, are BTC transaction fees really that low ($1 for a 10m transaction)? I've been hearing complaints for a while now about how long it takes to process minimum fee transactions. I don't have any experience with it, as I haven't messed around with BTC in a few years, but, it's definitely part of the argument for the changes happening tomorrow.
There was a spam campaign for the last 9 months from the pro-centralization camp to drive fees up to fit their narrative that we needed centralization (bigger blocks). But that stopped when segwit became clear it would lock in, and not free transactions are clearing.
In the past several weeks I've done transactions for less than a dollar that cleared in the next block. (the cost is more to do with size than the amount of money-- $1m in a single address costs a lot less than $1m in 1M addresses)
Unfortunately due to the lingering effects of the spam attack, some fee estimation software is way off.
Perhaps I should use BTC-e to convert to USD...Oh, wait...
So, what other reputable exchange is there that works for BTC->USD and vice-versa and doesn't have ridiculous fees (I agree that Coinbase fees are outrageously high).
I have moved USD across international borders hundreds of times for free. Every international bank supports it.
The same is probably true of EUR but I have no experience with it.
You have mixed transferring a currency with converting one currency into another. You meant transferring $10m of USD to EUR isn't free. Which is true. But neither is converting $10m of Bitcoin to Ethereum.
"What are the legitimate uses of Bitcoin? I have claimed here and will repeatedly do so -- there are none. I mean, sure, there are plenty, but apart from those, there are none."
It is much safer for me to buy things on the Internet with cryptocurrencies than credit cards. It seems like every few months there's a huge leak of customers and credit card information.
I'm a fan of bitcoin, but in this case I disagree. It is safer to sell things on the internet if you accept bitcoin, but it's more risky if you're the buyer. You can chargeback a credit card if you don't get what you paid for. You can't get your bitcoin back.
That you might exchange bitcoins for cash doesn't make international transfers an invalid use case. You don't seem to realize it but in many countries people who earn USD working for mechanical turk and the like end up losing %50 in conversion.
Purse.io lets you buy anything Amazon sells, just about, for bitcoin at a %5 discount (that %5 is not coincidence, it's the effective cost of credit cards.)
>Money laundering is the process of transforming the profits of crime and corruption into ostensibly "legitimate" assets.
>A cryptocurrency tumbler is a service offered to mix potentially identifiable or 'tainted' cryptocurrency funds with others, with the intention of confusing the trail back to the fund's original source.
English might not be my native language but I can see lots of parallels.
I never actually considered this before but a mixer is the physical world would be getting mailed (by anonymous parties) 10 bags of money, 9 legitimate ones and one known to be from mafia and with sequential bill numbers known to feds and then repacking and mixing up the banknotes and receiving 10 visitors, each of whom gets one bag from you.
You just laundered the money, sort of... it gets screwy (that's a very technical term ;) although does it really? From 9 legitimate bags you made 10 (functionally) legitimate ones. You can't trace the mafia guy after your mixing, you can't pick a guy with a bag at random and say he is the mafia perp, you can't say each of these guys now has 10% of illegitimate money in his bag because they can't be responsible (and don't even know) about actions of other people who mailed you money. An entire money bag just got laundered (by the definition above, it was crime proceeds and is now ostensibly legitimate because it can't be distinguished).
Laundering isn't about traceability. It's about taking money that's been gotten illegally (and thus you can't spend without the IRS asking questions) and paying tax on it so it appears as if you earned it by legitimate means.
Making traceable money untraceable doesn't mean it's now clean.
It seems to be about both taxes and making yourself not traceable to a crime (or the latter is a side effect of the former, since making money appear legitimately earned will of course unlink it from any crimes as a side effect/prerequisite).
Similarly there can be unusually high tax (like the 75% in Poland) on undocumented income but if that money could also be traced to a bank heist or drug deal as well you would be in much more trouble than just that tax.
As for USA's (un)usually far legal reach, strong extradition agreements, etc. - that can be up for debate. But money laundering itself (especially when starting with stolen funds) is hardly legal anywhere and mixers seem to fit the definition of laundering at a glance if you consider Bitcoin a currency, it's typical case of law not catching up with the technology and legacy laws being reused instead.
Yeah, you're right, the two are pretty well intermingled. To me, laundering is more about the "paying taxes" part, but there's definitely an element of obfuscation.
If all serials on cash were pervasively tracked, then we'd have and need such services. From criminals hiding their money, to a husband not wanting his wife to know he bought a gift at a jewelry store, everyone deserved privacy if they desire.
Money laundering is simply a term used by lazy prosecutors that can't find real crimes. Fundamentally it's criminalising the act of daring not to tell the government everything you do.
Not that mixing even accomplishes what criminals need - it leaves them needing a cover story for why they have so much Bitcoin.
Sequential bills is movie slang for marked/traced bills cops use to pay off ransoms and such.
And 'the government' isn't going after anyone who 'dared to not tell the government everything they did' or even after all the clients of this mixer or all bitcoin users but after a guy who ran a specific large mixer that was used in mixing bitcoin from a large theft and several small thefts and sketchy in general (whatever that means in context of a tool like Bitcoin that on its own is quite notorious).
And it's actually few governments together that are on this wider Mt. Gox case, including Japanese one (Mt. Gox location), Greek one (where Vinnik was arrested), etc.
They also said he possible played a role in the theft itself - we will see what comes of it.
The US government goes after all sorts of people that do things even remotely looking like money laundering. They make banks report $10K+ transactions, then invent a new crime if you avoid making such transactions. Small business owners get bit by this and end up fighting for their own money.
One minor difference with Bitcoin is that there are no serial numbers. Every bitcoin is identical to every other bitcoin. The blockchain tracks transaction source, destination, and amount, but there's no way to identify a specific bitcoin. Such a concept is actually meaningless, there are no bitcoins, just transactions.
This means that when a mixer or exchange wallet gets the bitcoins they can't be individually tracked anymore. This doesn't really matter in practice since all transactions are public.
The bag analogy still works if you remove serial numbers and just say that one of the bags was known to have came from mafia. You still can't identify which of the end receivers was the mafia and the effect is still a 'cleaning' process: dirty and clean go in, only clean (as in clean or dirty but not provably distinguishable from clean) comes out.
> The language in the indictment about BTC-e’s “criminal design” mimics the indictment against Liberty Reserve — an anonymous currency service taken down by law enforcement in 2013 — which also accused the online exchange of having a “criminal design” and a system “designed so that criminals could effect financial transactions under multiple layers of anonymity.”
Basing the indictment on the intent of the design - something hard to prove or reason about objectively - seems like a very slippery slope. Couldn't a similar statement be made about almost any system that protects user privacy? Or maybe they're referring to specific legal requirements not being conformed to rather than a general "criminal design"?
The money laundering statutes are so broad that you are a felon under them if you take money out of your savings and put it in your checking in order to make your credit card payment one month. Even if all three are at the same bank and none of the money is the result of a criminal activity.
I highly doubt that scenario exists without some other incriminating action, behavior, or police observation.
Civil Asset Forfeiture is an attack on private property and the legal principle of "innocent until proven guilty", but there has to be _some_ suspicion of a crime (usually alleged drug paraphernalia) or simple corruption on the part of the police and/or judges.
There is a money-laundering-related charge, IIRC called "structuring", in which the reporting threshold of $10k/day/person is intentionally avoided (eg. by $9,999 transactions on consecutive days). This isn't usually charged "out of the blue". In the recent Hastert structuring case[1], he told a bank employee that he was avoiding the reporting threshold even though his money transfers weren't actually money laundering after profiting from a crime.
There is a lot that I disdain about money laundering laws and civil asset forfeiture, but I'm not inclined to believe that "rothbard-rand" (the surnames of two famous Libertarians) has no dogs in this fight, so to speak.
There is no such thing as privacy from the state when dealing with money.
I don't know your salary and income, you don't know mine, but the state wants to know this for everybody.
This is the law of the land pretty much anywhere, and any large scale operations which try hiding this from the state (not from you and me) will be in trouble.
So if you don't do the KYC/AML thing, that can be called "criminal by design" since KYC/AML is kind of universal in the western world (including Bulgaria/Cyprus/BVI)
Of course they have no way to get btc-e's bitcoins, unless Vinnik tells them the private key, which I bet he will. So it's basically US stealing from people, yet again.
I wonder if the Mt Gox parties et al who were robbed will be refunded their bitcoin, since there is a ledger, or if the government will just keep everything. How could a refund be accomplished anyway? Would one need proof of owning a wallet that was emptied?
Aside from theft - of which the only evidence is money passing through the wallet of people associated with him - it seems that no crime was committed. Another attack on Bitcoin, and the war on drugs continues to kill more than the drugs themselves.
141 comments
[ 3.7 ms ] story [ 194 ms ] threadexchanges: gdax, bitstamp, nyse
marketplaces: localbitcoins, bitcointalk, otc markets
bitsquare is closer to localbitcoins than bitstamp.
And the longer the system exists, the more information will accumulate that would allow anyone with an interest in doing so to correlate blockchain transactions to "real-world" people & systems.
I'm sure I'm missing something though, since I'm by no means a cryptologist, or more than an interested spectator on crypto-coins. (I mined about 0.1 bc back when it was still possible to do that in a week or so on a mid-range AMD GPU. and, shocked at the rise in value, cashed it in for about $200 a few years ago.)
Anonymous means, well, anonymous.
These days there are things like mixers that make it extremely difficult to track.
There are even crytocurrencies where mixing is built in and every transaction effectively goes through a mixer.
https://en.m.wikipedia.org/wiki/Cryptocurrency_tumbler
It's as bad as calling copyright infringement "theft" or even "piracy", though the later term has been pretty watered down. Or how banks push the idea of "Identity theft" as if someone stole your identity versus the bank failing to verify your identity.
We don't call encryption "information laundering" and niether should simple financial privacy have any negative term.
Absolutely true. I'm a convicted money launderer because I once used a chinese bitcoin exchange instead of an European one.
The wires from the Chinese exchange were nothing compared to the EU ones, simply the origin country was enough to justify my conviction.
While at it they "subpoenad" my bank account history, saw a bunch of wires from normal European exchanges and then one wire from a Chinese account. Never cared to ask about the European ones (I verified that they didn't ask the exchanges directly either.), but the Chinese one was apparently particularly interesting.
They asked me a few questions, I explained the (legal) source of the money, few years later the thing actually got to court and I was found guilty with the only evidence against me being the country where the funds came from.
Not worth it to appeal, I might get my 6-7k euros back but would probably end up paying more than that for lawyers.
50700 counts of aggravated unauthorized access to computer systems for making some scripts to drop a bot on lots of coldfusion site. Incl https://news.ycombinator.com/item?id=5552756
1 count of the same https://news.ycombinator.com/item?id=6637426
1 of the same + bonus charge for possibly starting a SMTP server on the domain https://news.ycombinator.com/item?id=5098218
Credit card fraud for sharing some cards on IRC and unsuccessfully trying to use a few.
Money laundering for receiving a wire of ~6.5k euros from China.
There might be something more, but that's all I can remember for now. Mostly pretty silly things anyway.
Yep, it tends to be an easy extra charge to slap on anyone who isn't keeping very good books.
As MichaelGG said, a fake crime.
If you are acting in a way that's indistinguishable from someone who is attempting to hide evidence of a crime, don't be surprised when people think you are doing something wrong.
Prosecutors are free to think someone's doing something wrong. Investigators might be able to get warrants under such suspicions (iffy but perhaps acceptable). But they should need to find actual wrongdoing to be able to convict people, and this last part is what is lacking today.
Just like a trader is only a fence when he trades stolen good.
Therefore, by definition, money laundering is assisting a crime. If the crime had a victim, then, by proxy, laundering the money of the crime is not victimless either.
Also, using your argument about money laundering, what about a restaurant that serves mostly mafioso, but never engages in any unlawful activity themselves. They are providing food to criminals, which is even more critical to their criminal enterprise. After all, the mafia can't commit crimes if they can't eat, right? And they are paid with funds that result from crimes. By your analogy, the restaurant owner is assisting in a crime. So should that restaurant owner be charged with some kind of new crime? (like money laundering is a relatively new crime that has been created over the past 50 years) Like, criminal gastronomy, feeding in the 3rd degree, or something?
Money laundering is now about not reporting all your financial movements to the government. It's surpassed the even controversial idea of using it against criminals in lieu of real crimes.
It's surprising how many people are unaware of this, even on a forum composed of fairly informed people like HN.
Do you apply this kind of reasoning to encrypted communications? If not, why not?
The electorate would benefit less from total financial privacy than it does from the ability to enforce taxes and civil judgements.
I'm not so sure about that.
Money laundering requires the intent to conceal the origin of proceeds from certain specific unlawful activities or to avoid financial reporting requirements. Hiding the origin of lawfully obtained money is legal.
Simply using a tumbler is not illegal.
For instance, if someone used legally obtained money to buy bitcoin, put them through a tumbler, then used the bitcoin to buy drugs. That would not be money laundering because it does not hide the proceeds of a crime or avoid any financial reporting requirements.
On the other hand, if the drug dealer took the bitcoin that they were paid with and put it through a tumbler, that would be money laundering because they would be hiding the origin of the proceeds from selling drugs.
Right, but operating a tumbler without FINCEN registration and a MSB license is illegal. Even if the money put through it is entirely legal.
In practice this gets complicated as some exchanges require a valid government ID (drivers license say) and that's why these so-called "tumbling" services sprung up. The idea is that, for a small fee, you put X bitcoin into a pool with other people, and get (X - eps) back out and put into another identity of your choosing (eps being transaction fees). As long as the tumbling service doesn't get compromised so that the destination address can't be tied to the source address, this allows for a level of real world identity protection.
Presumably even sending bitcoin from an identity that's tied to your meat space identity directly to another identity that you create provides a layer of protection.
But then any transaction from your second, secret identity that compromises you will retroactively compromise all other transactions made from that identity. Your opsec has to consistently be perfect.
Not to say one is in the clear even if they do such, because as some say, metadata kills…
All newer cryptography based systems for preserving privacy, like ZCash and Monero, are based around elliptic curve math that will one day be broken. As with 4chan or reddit, the belief that one is anonymous can lead one to engage in riskier or more controversial activity. This is at risk of being uncovered in the future, with potential for damage to the individual.
And if one were to, say, take some transparent ZEC, send it to an invisible location, then take it out to a transparent location and do the same again to a third transparent location (to then convert to bitcoin or whatever)... EC would have to be totally completely broken to figure out the private keys of all three transparent addresses (not just weak in the sense of $1B of GPUs can reverse find one key in 6 months). And still you don't know who those addresses belong to (and haven't broken the invisible part to know where the coins that went to the second and third address came from), right?
Linux and Open Source might be the users last choice, but might be the last man standing one day- if for example sb would write a maschine learning virus able to detect and exploit new weaknesses in a dormant form.
You don't even have to scratch the surface of Bitcoin to learn that at its core Bitcoin is a distributed ledger, powered by the "blockchain" which is open book for anyone to follow every transaction ever made. This is not a separate tracking system, it's the very fundamentals of how Bitcoin is able to function and it makes no effort to attempt to keep its users anonymous.
I can only conclude that claims Bitcoin is anonymous when compared to cash is either propaganda or ignorance.
Another way for bitcoins to be anonymous is to use a "mixer". If you send your coins to a very large wallet (that contains a lot of money owned by a lot of other people), and then whoever controls that wallet then distributes those coins to a bunch of other newly created addresses (which you control the keys for), then there would be no way to tell whose money was sent to those wallets. It might be your money. It might be a thousand other people's money. This is called bitcoin laundering.
Transactions are always traceable, though. People might think their bitcoins are safe and anonymous, but then they use their own personal computer on their own personal internet connection to actually spend the bitcoins on something illegal. Guess what? News flash! The NSA and who knows how many other government agencies have been monitoring internet traffic since the 90s! Ever heard of Carnivore? How about NarusInsight? Do you honestly think they can't track P2P traffic? Do you honestly think that your P2P bitcoin spending transaction can't be traced back to your IP and to your address? They can probably track a lot of Tor traffic, too.
The only way bitcoin is anonymous is if someone keeps every single step of the entire process anonymous. Mining/purchasing has to be anonymous. Storage has to be anonymous (no third party wallets). Using an exchange has to be anonymous (good luck with that). Selling the coin (or purchasing something with it) has to be anonymous. The chain is only as strong as its weakest link, and each link has many potential attack vectors.
For example, you might think you are using a perfectly safe bitcoin "mixer" service, but for all you know, the feds are actually the ones operating the mixer service, and are tracing every single transaction from start to end.
So yeah. The long and short of it is that Bitcoin is heavily monitored and traced, which is why the government allows it to exist.
[1]: https://getmonero.org/
[2]: https://getmonero.org/resources/moneropedia/ringsignatures.h...
Here's a fairly detailed StackExchange thread on it: https://monero.stackexchange.com/questions/112/how-is-monero...
2. Dash is basically a coin join, working like a Bitcoin mixer. This means you can still gather some information from the mix given enough analysis. It's different compared to Monero where you cannot tell which of the possible inputs is the right one. The security is based on probability and cryptography instead of obfuscation.
3. Monero hides both the addresses of the transaction and the amount. In Dash the transaction amount is open and analysis could correlate the obfuscated sending and receiving addresses.
4. The mixing in Dash is performed by "masternodes", a subset of all nodes, and if compromised they can break the privacy. Particularly scary after the recent Bitcoin mixer shutdown. Monero contains no such third party weakness.
All in all the anonymity of Dash is a joke compared to what Monero gives you.
1. There are no mobile wallets, multisig or hardware wallets. Now all of these are in the works and hopefully ready this year.
2. Very little effort has been spent on marketing compared to other coins (for example Dash). The biggest reason is that Monero is community funded and it's not possible to use a share of the developers share of coins, as there isn't one. This is compared to the marketing in Dash which has been fueled by the instamine. Focus has instead been placed on developing the fundamentals.
In fact it's a bit surprising that Monero has had the popularity it has. The official GUI was only released relatively recently and before then you were sort of forced to use the command line client.
if you buy 'into' BTC in an anonymous manner and make purchases 'within' BTC the transactions are wholly traceable but the source is anonymous
anonymity is lost when moving 'out' of BTC 'into' other currencies that require, or have subsequent effect, of identifying the user
The price of Litecoin was usually higher on btc-e I think solely because people would deposit btc and buy ltc as a way to hide the source of their coins. It was widely considered shady but trustworthy by its longevity.
But more worryingly, "The language in the indictment about BTC-e’s “criminal design” mimics the indictment against Liberty Reserve".
This also mimics the Kim DotCom / MegaUpload take down, along with a likely "FBI" operation in a foreign country.
It seems there is now a policy of taking down things that are "criminal in design" - waiting for the next raid on "criminal in design" encryption software...
What are those. I have claimed here and will repeatedly do so -- there are none. I mean, sure, there are a few companies which integrate the sell-your-bitcoins-buy-our-product in one go but the volume of that is near irrelevant. And no, international transfers do not count as a usage because not only the sender needs to buy bitcoins the seller needs to sell them too...
Come on...
Computers can be used to watch child pornography. What point am I making with this phrase? None.
The current cost to move $10m of bitcoin across international borders is about $1. Attempt the same via conventional means and you'll quickly realise it's benefits go beyond monetary efficiency.
As for current working use cases Factom[0] stores an auditable timestamped data trail in a merkle tree structure, which is then anchored into the bitcoin blockchain.
This is a tech minded site, I would hope people here understand the value of immutability. Real immutability, data that can't be altered or undone in anyway.
Many seem upset at bitcoins meteoric rise and the rampant speculation for good reason, but make no mistake blockchains will be around long after we are gone.
[0] www.factom.org
- resilience against political "changes" (esp. China, Russia); money that is under foreign, unaffiliated regulatory regime cannot be seized by authorities at home
- taxes: you want to secure your cash/assets from sudden taxes on property/equity
- resilience against a bank going literally bankrupt. this happened in the financial crisis, even in the EU, and one bank's customers IIRC lost everything above 100.000 € on their accounts.
Also, if you run an international business with regional offices or such, you don't want to spend huge amounts of both time and money when transferring company funds or buying machinery from vendors in other jurisdictions.
I'm fairly sure the cost is close to 0 for eur using SEPA. I've also transferred chf and usd across borders with no fees.
FX fees are different (around 0.01% with a decent broker?) but I suppose BTC spread+commission is higher than that anyway.
Also, are BTC transaction fees really that low ($1 for a 10m transaction)? I've been hearing complaints for a while now about how long it takes to process minimum fee transactions. I don't have any experience with it, as I haven't messed around with BTC in a few years, but, it's definitely part of the argument for the changes happening tomorrow.
In the past several weeks I've done transactions for less than a dollar that cleared in the next block. (the cost is more to do with size than the amount of money-- $1m in a single address costs a lot less than $1m in 1M addresses)
Unfortunately due to the lingering effects of the spam attack, some fee estimation software is way off.
So, what other reputable exchange is there that works for BTC->USD and vice-versa and doesn't have ridiculous fees (I agree that Coinbase fees are outrageously high).
But at the moment moving $10m through bitcoin is not one of them.
For one, I don't need to be an op-sec expert to ensure that my money doesn't just vanish because I made a mistake or something was hacked somewhere.
The same is probably true of EUR but I have no experience with it.
You have mixed transferring a currency with converting one currency into another. You meant transferring $10m of USD to EUR isn't free. Which is true. But neither is converting $10m of Bitcoin to Ethereum.
Purse.io lets you buy anything Amazon sells, just about, for bitcoin at a %5 discount (that %5 is not coincidence, it's the effective cost of credit cards.)
>A cryptocurrency tumbler is a service offered to mix potentially identifiable or 'tainted' cryptocurrency funds with others, with the intention of confusing the trail back to the fund's original source.
English might not be my native language but I can see lots of parallels.
I never actually considered this before but a mixer is the physical world would be getting mailed (by anonymous parties) 10 bags of money, 9 legitimate ones and one known to be from mafia and with sequential bill numbers known to feds and then repacking and mixing up the banknotes and receiving 10 visitors, each of whom gets one bag from you.
You just laundered the money, sort of... it gets screwy (that's a very technical term ;) although does it really? From 9 legitimate bags you made 10 (functionally) legitimate ones. You can't trace the mafia guy after your mixing, you can't pick a guy with a bag at random and say he is the mafia perp, you can't say each of these guys now has 10% of illegitimate money in his bag because they can't be responsible (and don't even know) about actions of other people who mailed you money. An entire money bag just got laundered (by the definition above, it was crime proceeds and is now ostensibly legitimate because it can't be distinguished).
Making traceable money untraceable doesn't mean it's now clean.
Look at the definition here and tell me it doesn't sounds like a mixer: https://www.fincen.gov/history-anti-money-laundering-laws
Similarly there can be unusually high tax (like the 75% in Poland) on undocumented income but if that money could also be traced to a bank heist or drug deal as well you would be in much more trouble than just that tax.
As for USA's (un)usually far legal reach, strong extradition agreements, etc. - that can be up for debate. But money laundering itself (especially when starting with stolen funds) is hardly legal anywhere and mixers seem to fit the definition of laundering at a glance if you consider Bitcoin a currency, it's typical case of law not catching up with the technology and legacy laws being reused instead.
Money laundering is simply a term used by lazy prosecutors that can't find real crimes. Fundamentally it's criminalising the act of daring not to tell the government everything you do.
Not that mixing even accomplishes what criminals need - it leaves them needing a cover story for why they have so much Bitcoin.
And 'the government' isn't going after anyone who 'dared to not tell the government everything they did' or even after all the clients of this mixer or all bitcoin users but after a guy who ran a specific large mixer that was used in mixing bitcoin from a large theft and several small thefts and sketchy in general (whatever that means in context of a tool like Bitcoin that on its own is quite notorious).
And it's actually few governments together that are on this wider Mt. Gox case, including Japanese one (Mt. Gox location), Greek one (where Vinnik was arrested), etc.
They also said he possible played a role in the theft itself - we will see what comes of it.
This means that when a mixer or exchange wallet gets the bitcoins they can't be individually tracked anymore. This doesn't really matter in practice since all transactions are public.
Basing the indictment on the intent of the design - something hard to prove or reason about objectively - seems like a very slippery slope. Couldn't a similar statement be made about almost any system that protects user privacy? Or maybe they're referring to specific legal requirements not being conformed to rather than a general "criminal design"?
Civil Asset Forfeiture is an attack on private property and the legal principle of "innocent until proven guilty", but there has to be _some_ suspicion of a crime (usually alleged drug paraphernalia) or simple corruption on the part of the police and/or judges.
There is a money-laundering-related charge, IIRC called "structuring", in which the reporting threshold of $10k/day/person is intentionally avoided (eg. by $9,999 transactions on consecutive days). This isn't usually charged "out of the blue". In the recent Hastert structuring case[1], he told a bank employee that he was avoiding the reporting threshold even though his money transfers weren't actually money laundering after profiting from a crime.
There is a lot that I disdain about money laundering laws and civil asset forfeiture, but I'm not inclined to believe that "rothbard-rand" (the surnames of two famous Libertarians) has no dogs in this fight, so to speak.
[1] https://en.wikipedia.org/wiki/Dennis_Hastert#Indictment
I don't know your salary and income, you don't know mine, but the state wants to know this for everybody.
This is the law of the land pretty much anywhere, and any large scale operations which try hiding this from the state (not from you and me) will be in trouble.
So if you don't do the KYC/AML thing, that can be called "criminal by design" since KYC/AML is kind of universal in the western world (including Bulgaria/Cyprus/BVI)
Some reports that their other domain may still be up (btc-e.nz), but it just hangs for me.
So, you could put "104.23.131.83 btc-e.com" in your /etc/hosts file and try it. I did that, but cloudflare times out.
But far more important is the challenge of designing an exchange that can't be taken down.
https://twitter.com/cactuspits/status/890358676300718081