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Why the feds took down one of Bitcoin’s largest exchanges

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Re: Why the feds took down one of Bitcoin’s largest exchanges

#51

Post by MichaelGG »

rkowalick wrote: post #47
ethbro wrote: post #16

Earlier quoted context omitted.

Randomly swapping coins is an attempt to address anonymity. https://en.m.wikipedia.org/wiki/Cryptocurrency_tumbler

This is basically money laundering, right?

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.

Re: Why the feds took down one of Bitcoin’s largest exchanges

#52

Post by rothbardrand »

basketbasket wrote: post #25
ineedasername wrote: post #8

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…

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…

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?

Re: Why the feds took down one of Bitcoin’s largest exchanges

#53

Post by rothbardrand »

microsage wrote: post #35

> 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 - so…

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.

Re: Why the feds took down one of Bitcoin’s largest exchanges

#54

Post by spacemanmatt »

hexc0de wrote: post #29
eadz wrote: post #14

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 ne…

Like Telegram Messenger

Or Signal

Re: Why the feds took down one of Bitcoin’s largest exchanges

#55

Post by FRex »

StavrosK wrote: post #33
FRex wrote: post #30

>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 cons…

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).

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.

Re: Why the feds took down one of Bitcoin’s largest exchanges

#56

Post by rothbardrand »

ryanlol wrote: post #2

“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.”

Jerry's a great guy and Coin Center is the EFF of crypto. Everyone should send them some coins.

Re: Why the feds took down one of Bitcoin’s largest exchanges

#57

Post by mschuster91 »

nikanj wrote: post #36
honestlyreally wrote: post #26

Earlier quoted context omitted.

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 b…

What's the legal status for moving $10m across international borders like that?

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.

Re: Why the feds took down one of Bitcoin’s largest exchanges

#58

Post by ryanlol »

MichaelGG wrote: post #51
rkowalick wrote: post #47

Earlier quoted context omitted.

This is basically money laundering, right?

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 launder…

>Money laundering is a fake crime and propaganda by governments with prosecutors unable to find real crime.

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.

Re: Why the feds took down one of Bitcoin’s largest exchanges

#59

Post by rothbardrand »

chx wrote: post #22

> There are many legitimate uses of Bitcoin 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...

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.)

Re: Why the feds took down one of Bitcoin’s largest exchanges

#60

Post by MichaelGG »

FRex wrote: post #30

>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 cons…

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.

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