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BTC-e and its founder charged in 21-count indictment over hack of Mt. Gox

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Re: BTC-e and its founder charged in 21-count indictment over hack of Mt. Gox

#131

Post by celticninja »

olalonde wrote: post #45
meowface wrote: post #41

Earlier quoted context omitted.

I wonder how much BTC-e knew about these money sources. Were they a general "don't ask, don't tell" laundering operation that just so happened to be used by these people because it was their best laundering option, or were they directly involved in some of the hacks?

What are the odds that whoever was running BTC-e also happened to be involved in any of those hacks? It's definitely a case of "don't ask, don't tell" and perhaps, making that policy known.

I always thought this was possible, btce was set up by a group of crypto currency hackers, they are in a perfect position to know how exchanges work and the possible security issues they may have, they also have an easy way to launder the stolen coins. Further, bad publicity for their competitors is good publicity for them.

Re: BTC-e and its founder charged in 21-count indictment over hack of Mt. Gox

#132

Post by justinjlynn »

piaste wrote: post #125
atemerev wrote: post #112

Earlier quoted context omitted.

Right. And cars manufacturers assist kidnappers and bank robbers escapes. And cell phones can be used as remote detonators. And end-to-end cryptography... no, this is an abomination , you shouldn't even think of it unless you willingly submit your private keys to the appropriate government agency for safe escrow to aid lawful investigations! (I would have put /s here, but all these lines will be used at face value so…

Money laundering is knowingly assisting criminal activities. You're actively hiding where the money comes from, exactly because you know it comes from illegal sources. (If the source were legal but embarrassing, all you'd need is standard bank privacy, not active laundering.) The car-related analogy isn't a car manufacturer. It isn't even an anonymous, stealth rental car service (although plenty of crimes could benef…

Actually, no. Money laundering is generally defined as obscuring the source and/or destination of funds whatever the reason. It is a false equivalence to say that because one wants to hide the source or destination of funds that one knowingly is doing so with an illegal activity being the motivating cause. There is no such thing as "standard bank privacy" when nearly anyone in that organisation can look up your data without explicit justification or judicial review. In an era where, for corporations at least, money is speech, it certainly is limited for us mere mortals who can't setup shell corporations to sacrifice themselves for our causes.

Edit: I should be quite clear, I am neither for or against AML regulations. I, however, am for an equal playing field. I would like to see a world where the increasing quantity of money one has doesn't have an increasing effect on how many times one's vote counts at the expense of those who don't have as much. Privacy and the ability to act collectively to support unpopular opinions should not be a commodity that can be bought and sold in the form of a corporate veil.

Re: BTC-e and its founder charged in 21-count indictment over hack of Mt. Gox

#133

Post by Jabanga »

modeless wrote: post #67
openmosix wrote: post #22

The question for me is: why US? He is a Russian citizen, the company is based in Bulgaria, servers in Russia, legal HQ in Cyprus and all the services operated from Seychelles - arrested in Greece. The MtGox hack affected a Japanese company. I'm not debating the nature of the crimes, etc - I am just wondering, when does it become a US case? I can get the "there were US customers" - but why not Europe? Or Japan? Or Rus…

Look at the actual charges in the indictment. All the BTC-e stuff is not what he's charged with. He's charged with transferring stolen Mt Gox Bitcoins to Tradehill, a San Francisco based exchange (now defunct). That's the US connection that will seal his extradition. They also allege that BTC-e is (at least partially) hosted in the US and does business with many US companies, which is likely true. But that's not what…

>Subsequently I expect to see Monero delisted from any exchange that follows KYC after some pressure from law enforcement.

This would be a very dangerous precedent for the cause of privacy. It's the financial equivalent of banning encrypted communication.

Re: BTC-e and its founder charged in 21-count indictment over hack of Mt. Gox

#134

Post by venantius »

celticninja wrote: post #130
Cthulhu_ wrote: post #126

Earlier quoted context omitted.

Only way to launder BTC - break the history chain, so to speak - is to first pull it out of the network - which requires either an exchange, or like a street deal (cash for BTC). Exchanges require identification so either there's a dodgy one that doesn't ask for that, or you get a mule. Anyway, then you have cash money, you buy BTC back. Or keep the cash, I mean I wouldn't want to keep BTC if I had stolen it. It's pr…

Actually you don't need to get it to cash, change it to another crypto such as LTC or ether on an exchange, send it off exchange to another exchange and buy back btc to have unlinked coins. You could also use a mixer for the alt coin as you move it between exchanges for further obfuscation. Most exchanges that deal in alt coins only require ID/verification if you want to exchange to fiat, so crypto to crypto can be d…

Sure, except that exchange will have a record of the transaction. So as long as they're still in business, the authorities can go to them and request them to provide a record of the transaction, and you have both wallet IDs.

Re: BTC-e and its founder charged in 21-count indictment over hack of Mt. Gox

#135

Post by kbody »

kobeya wrote: post #121
wbl wrote: post #84

Earlier quoted context omitted.

Analysing monero traceability is hard. Early wallets picked addresses to use in bad ways. A lot of academic work us needed. Luckily ZeroCoin exists.

I don't know why you are being down voted, since you said exactly what I was alluding to. Monero's ring signature traceability is very hard to analyze. Even if the ring signature is not broken in a cryptographic sense, transactions can still be linked by the other fingerprints they leave, or by wide spectrum analysis. It's a bit like a game of sudoku. A mixin input could have 4 different coins, and technically you ca…

You also forget Confidential Transactions. How can you do any kind of useful downstream or source analysis when you don't know the amounts and you have stealth addresses? Also you can have huge amount of mixins which use the total pool of TXs ever done.

It's the same as RSA4096, in theory you could bruteforce eventually crack a key, but in reality it's not a viable attack.

You're just saying abstract things without backing them up with details. Also Zcoin has scaling issues with TXs being 50x of Zcash (another Zerocoin-based implementation)

Re: BTC-e and its founder charged in 21-count indictment over hack of Mt. Gox

#136

Post by dumbneurologist »

khuey wrote: post #59
toomuchtodo wrote: post #25

Earlier quoted context omitted.

People often don't realize that if you fly through US airspace after violating certain US laws as non-citizens, you will be apprehended through an emergency layover coordinated with the carrier. That's a contributor to why US federal three letter agencies constantly ingest passenger manifests.

Like this guy http://www.cbc.ca/news/canada/montreal/man-removed-from-aero...

what ever happened to him? the news with his name stops the day he was arrested.

Re: BTC-e and its founder charged in 21-count indictment over hack of Mt. Gox

#137

Post by kobeya »

kbody wrote: post #135
kobeya wrote: post #121

Earlier quoted context omitted.

I don't know why you are being down voted, since you said exactly what I was alluding to. Monero's ring signature traceability is very hard to analyze. Even if the ring signature is not broken in a cryptographic sense, transactions can still be linked by the other fingerprints they leave, or by wide spectrum analysis. It's a bit like a game of sudoku. A mixin input could have 4 different coins, and technically you ca…

You also forget Confidential Transactions. How can you do any kind of useful downstream or source analysis when you don't know the amounts and you have stealth addresses? Also you can have huge amount of mixins which use the total pool of TXs ever done. It's the same as RSA4096, in theory you could bruteforce eventually crack a key, but in reality it's not a viable attack. You're just saying abstract things without b…

There are more ways of linking transactions than just values. I enumerated some of them in my comment.

Re: BTC-e and its founder charged in 21-count indictment over hack of Mt. Gox

#138

Post by joosters »

celticninja wrote: post #130
Cthulhu_ wrote: post #126

Earlier quoted context omitted.

Only way to launder BTC - break the history chain, so to speak - is to first pull it out of the network - which requires either an exchange, or like a street deal (cash for BTC). Exchanges require identification so either there's a dodgy one that doesn't ask for that, or you get a mule. Anyway, then you have cash money, you buy BTC back. Or keep the cash, I mean I wouldn't want to keep BTC if I had stolen it. It's pr…

Actually you don't need to get it to cash, change it to another crypto such as LTC or ether on an exchange, send it off exchange to another exchange and buy back btc to have unlinked coins. You could also use a mixer for the alt coin as you move it between exchanges for further obfuscation. Most exchanges that deal in alt coins only require ID/verification if you want to exchange to fiat, so crypto to crypto can be d…

And this might be one reason why the US went after this guy - the BTC-e exchange was extremely popular for laundering criminal money. A google research talk showed over 95% of bitcoin ransoms were cashed out via BTC-e.

Once the US have this guy in custody, they can then get their hands on the server transaction records, and chase down the criminals who extorted money from people and companies in the US.

Re: BTC-e and its founder charged in 21-count indictment over hack of Mt. Gox

#139

Post by joosters »

Jabanga wrote: post #133
modeless wrote: post #67

Earlier quoted context omitted.

Look at the actual charges in the indictment. All the BTC-e stuff is not what he's charged with. He's charged with transferring stolen Mt Gox Bitcoins to Tradehill, a San Francisco based exchange (now defunct). That's the US connection that will seal his extradition. They also allege that BTC-e is (at least partially) hosted in the US and does business with many US companies, which is likely true. But that's not what…

>Subsequently I expect to see Monero delisted from any exchange that follows KYC after some pressure from law enforcement. This would be a very dangerous precedent for the cause of privacy. It's the financial equivalent of banning encrypted communication.

Bullshit. Every other bank and (non-crypto) exchange in existence requires some form of KYC, and they will want to know the source of larger funds.

And isn't this an admission that Monero is of no real legal use? Otherwise, why would you care about cashing it out at an exchange? You could spend it on goods and services instead.

Re: BTC-e and its founder charged in 21-count indictment over hack of Mt. Gox

#140

Post by joosters »

dkersten wrote: post #113
khuey wrote: post #76

Earlier quoted context omitted.

The charges in the indictment are for illicit transactions with TradeHill which was based in the US.

So then TradeHill should be the ones arrested, surely?

TradeHill no longer exists, but I wouldn't want to be their ex-CEO. Their culpability depends on whether or not they knew the money being laundered was dirty, and whether or not their AML and KYC were good enough.
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